Chapter 7 Discharge Actions

Partnerships, Corporations, and Limited Liability Companies (LLCs). Discharges are not granted in Chapter 7 cases filed by partnerships, corporations, or Limited Liability Companies (LLCs). (See IRM 5.9.17.11, Closing Chapter 7 or Liquidating Chapter 11 Partnerships, and IRM 5.9.17.12, Closing Corporate Chapter 7 Bankruptcies and Chapter 7 Bankruptcies Filed by Limited Liability Companies (LLCs).)

Ineligibility to Receive a Discharge Due to a Discharge in a Prior Case. An individual may not be eligible to receive a discharge in the current Chapter 7 case if they received a discharge in a prior bankruptcy case. Eligibility is based on the petition date of the prior bankruptcy, the prior bankruptcy chapter, and the petition date of the current Chapter 7 case. It is also based on whether the discharge in the prior bankruptcy was in a case filed pre-BAPCPA or a case filed post-BAPCPA. For additional information see:

11 USC 727(a)(7);

11 USC 727(a)(8);

IRM 5.9.5.7.1(5), Serial Filers, Systemic Identification in Serial Filer Cases, Discharge Limitations; and,

IRM 5.9.5-3, Allowable Elapsed Time Between Bankruptcy Filings and Discharges.

No Asset Discharge for Individual Debtors. When an individual debtor receives a discharge in Chapter 7 No Asset case, the CIO runs the case through the Automatic Discharge System (ADS) for systemic adjustments unless the account is tagged for manual processing. Unless a discharge determination report (DDR) is generated by ADS, all closing actions including lien releases are completed without caseworker intervention. Many Chapter 7 No Asset cases are investigated prior to the discharge for collection potential from EAEP and for the fraud or willful evasion exceptions to discharge, when required. The investigations are usually early in the case. In these instances, there should be documentation in the AIS history to assist caseworkers in the resolution of any DDRs issued for EAEP or for any DDR generated for willful evasion. If there is no collection potential from EAEP, add the "No EAEP" case classification on AIS. If there is no indication of fraud or willful failure to pay, add the "No WFTP" case classification for the case on AIS. See IRM 5.9.17.5, Exempt, Abandoned, or Excluded Property (EAEP), and subsections for additional information. Because the bankruptcy laws regarding the scope of a Chapter 7 discharge are complex, it may be necessary to consult Counsel (L&A) for legal guidance when manual processing of a Chapter 7 case is required and issues are not clarified within this IRM.