Does Bankruptcy Have a Statute of Limitations?

Black’s Law Dictionary defines a statute of limitations as a “statute establishing a time limit for suing in a civil case, based on the date when the claim accrued (as when the injury occurred or was discovered).” A statute of limitations is a defense to a lawsuit.

Bankruptcy law has many limitations and restrictions. An important limitation is found in the bankruptcy means test, which can disqualify a debtor from Chapter 7 bankruptcy. Should the means test demonstrate that the debtor has sufficient disposable income to repay unsecured creditors, the debtor is presumed not eligible to file Chapter 7 and entirely discharge the debts without payment.

The Bankruptcy Code also limits the debtor’s ability to discharge debts after he has received a prior discharge. A debtor is not eligible to receive a second discharge in a Chapter 7 case for eight year after previous Chapter 7 case in which he received a discharge, or six years after a Chapter 13 case. The time limitations drop to four years to receive a Chapter 13 discharge after a Chapter 7 case, and only two years between Chapter 13 cases.

Bankruptcy debtors are also restricted in re-filing a case after dismissal. If a case is dismissed for failure to obey a court order, or is voluntarily dismissed while a motion to lift stay is pending, the debtor is prohibited from re-filing another bankruptcy case for 180 days. The automatic stay is also limited if the debtor has filed a prior bankruptcy within the past year.

Time limitations apply to creditors during and after bankruptcy. The conclusion of the meeting of creditors mandated by section 341 of the Bankruptcy Code (also known as the “Trustee’s Meeting”) starts a series of time limitations for creditors:

• 30 days to object to an exemption claimed by the debtor
• 60 days to file a complaint to except a particular debt from discharge, or to deny debtor discharge in a Chapter 7 case
• 90 days to file a proof of claim, by unsecured creditor other than tax claimant, in a Chapter 12, 13, or Chapter 7 case with assets.

Creditors are also limited in the time they can seek to revoke the debtor’s bankruptcy discharge. When the debtor has committed fraud, the time restriction is generally one year.

The Bankruptcy Code has many time restrictions that work for and against debtors and creditors alike. An experienced bankruptcy attorney is able to avoid time limitation traps for his client, and use these legal restrictions to his client’s advantage. If you need bankruptcy assistance from an experienced attorney, call today for a free consultation.