PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
TIDEWATER FINANCE COMPANY,
Creditor-Appellant,
v.
DEBORAH WILLIAMS,
Debtor-Appellee, No. 06-1618
and
BUD STEPHEN TAYMAN,
Trustee.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Richard D. Bennett, District Judge.
(1:05-cv-02147-RDB)
Argued: March 12, 2007
Decided: August 16, 2007
Before NIEMEYER, MOTZ, and DUNCAN, Circuit Judges.
Affirmed by published opinion. Judge Motz wrote the majority opin-
ion, in which Judge Duncan joined. Judge Duncan wrote a separate
concurring opinion. Judge Niemeyer wrote a dissenting opinion.
COUNSEL
ARGUED: James Robert Sheeran, TIDEWATER FINANCE COM-
PANY, Chesapeake, Virginia, for Appellant. Edward A. Derenberger,
2 TIDEWATER FINANCE v. WILLIAMS
Glen Burnie, Maryland, for Appellee. ON BRIEF: Matthew M.
Barnes, TIDEWATER FINANCE COMPANY, Virginia Beach, Vir-
ginia, for Appellant.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
In this bankruptcy appeal we must decide whether a court should
toll the mandatory period a debtor must wait to obtain a second Chap-
ter 7 discharge, during the pendency of any intervening Chapter 13
proceeding filed by the debtor. For the reasons stated below, we agree
with the bankruptcy and district courts that tolling does not apply
here, and so affirm.
I.
A.
The Bankruptcy Code offers individual debtors two primary ave-
nues of relief: Chapters 7 and 13 of the Code.1 Under Chapter 7, a
debtor liquidates his non-exempt assets; the proceeds are then distrib-
uted to creditors pursuant to a schedule of priorities. 11 U.S.C.A.
§ 701 et seq. (West 2007); see 6 Collier on Bankruptcy ¶ 700.01
(Alan N. Resnick & Henry J. Sommer eds., 15th ed. rev. 2007) [here-
inafter Collier]. At the conclusion of a Chapter 7 proceeding, the
debtor normally receives a discharge. See 11 U.S.C.A. § 727 (West
2007). The discharge provides the debtor with a "fresh start" by
enjoining the collection of any remaining debts, unless the Code
excepts those debts from discharge. See 11 U.S.C.A. §§ 523-24 (West
2007).
Alternatively, an individual may attempt to repay his debts through
1
Individuals may also file under Chapter 11 of the Code, but most
choose Chapter 13 because it offers similar relief with streamlined proce-
dures. In addition, family farmers or fishermen with regular annual
income may file under Chapter 12.
TIDEWATER FINANCE v. WILLIAMS 3
the procedure set forth in Chapter 13. 11 U.S.C.A. § 1301 et seq.
(West 2007). Chapter 13 "provides a reorganization remedy for con-
sumer debtors and proprietors with relatively small debts." Johnson
v. Home State Bank, 501 U.S. 78, 82 (1991). Under Chapter 13, the
debtor submits a repayment plan to the bankruptcy court, which will
confirm the plan if it meets statutory criteria that protect creditors’
interests. See 8 Collier ¶¶ 1300.01, 1325.01, 1325.05. If a debtor suc-
cessfully completes a confirmed plan, he receives a discharge of
remaining eligible debts. See id. ¶ 1328.01. Because Congress
intended Chapter 13 proceedings to be entirely voluntary, a debtor, as
a matter of right, may at any time dismiss his Chapter 13 petition or
convert it to a Chapter 7 proceeding. See id. ¶ 1307.01.
The initiation of either Chapter 7 or Chapter 13 proceedings trig-
gers an "automatic stay" under 11 U.S.C.A. § 362(a) (West 2007).
This automatic stay bars creditor collection activity for the duration
of the proceeding, although creditors may petition the court to termi-
nate, suspend, or condition the stay. See 3 Collier ¶¶ 362.01, 362.07.
The case at hand involves 11 U.S.C.A. § 727(a) (West 2004). That
section of the Bankruptcy Code governs discharges in Chapter 7 cases
and requires a court to grant a discharge unless certain conditions
apply. See id. The condition at issue here, § 727(a)(8), provides that
a debtor is not entitled to a discharge if he "has been granted a dis-
charge under [Chapters 7 or 11], in a case commenced within six
years before the date of the filing of the petition." Id. § 727(a)(8).2 In
other words, § 727(a)(8) requires debtors to wait at least six years,
after filing a Chapter 7 or 11 case that resulted in a discharge before
initiating a later Chapter 7 case, in order to be entitled to a discharge
in the later case.
2
The Bankruptcy Abuse Prevention and Consumer Protection Act of
2005, Pub. L. No. 109-8, 119 Stat. 23 (codified in scattered sections of
Title 11 of the U.S. Code), extends this period from six to eight years,
but does not otherwise amend § 727(a)(8). See id. § 312. The 2005 Act
applies, however, only to cases commenced on or after the enactment of
the statute. See id. §§ 1406, 1501. The debtor here, Deborah Williams,
filed her petition prior to enactment of the Act and so the six-year period
applies in this case.
4 TIDEWATER FINANCE v. WILLIAMS
B.
The parties do not dispute the material facts of this case. On Octo-
ber 29, 1996, Deborah Williams filed a petition under Chapter 7; she
later received a discharge. Almost two years later, on September 21,
1999, Williams initiated a Chapter 13 proceeding, which was dis-
missed on November 2, 1999. Williams initiated a second Chapter 13
case on May 15, 2000, which was dismissed on January 25, 2001.
On July 6, 2001, Tidewater Finance Company ("Tidewater")
obtained a judgment for $7,468.84, plus accrued interest and costs,
against Williams based on her default on an auto loan. After obtaining
this judgment, Tidewater did not initiate proceedings to either enforce
it or secure it through a lien or other device.3
Williams initiated a third Chapter 13 proceeding on August 14,
2001; it was dismissed on September 11, 2003. Tidewater has neither
alleged nor presented evidence that Williams filed for Chapter 13
relief in bad faith. Based on the record before us, we have no reason
to doubt that each time Williams filed for Chapter 13, she did so in
a sincere effort to manage and pay her debts.
On March 15, 2004, Williams initiated the Chapter 7 petition at
issue in this case. Tidewater commenced an adversary proceeding in
the bankruptcy court objecting to discharge and then moved for sum-
mary judgment, arguing that Williams was ineligible for a discharge
under § 727(a)(8). Tidewater acknowledged that § 727(a)(8) requires
3
The dissent asserts, without any basis in the record, that Tidewater has
failed to protect its rights "in large part because Williams has lingered in
multiple bankruptcy proceedings." Post at 19. In truth, we have no idea
why Tidewater chose not to enforce or secure its judgment. It may have
decided that the possible return was not worth the cost of further pro-
ceedings, or simply have forgotten about the debt until receiving notice
of Williams’s Chapter 7 petition. The record does reveal that between the
time Tidewater obtained a judgment against Williams and the initiation
of the Chapter 7 petition at issue here, Tidewater had over 220 days
when the automatic stay was not in effect, in which it could have acted,
but failed to do so. Tidewater offers no reason why it did not pursue its
claim during this period.
TIDEWATER FINANCE v. WILLIAMS 5
only that a debtor wait six years after filing a Chapter 7 petition that
resulted in a discharge before filing a subsequent Chapter 7 action and
that seven years, 139 days had passed since Williams filed the petition
that resulted in her first discharge. Nevertheless, Tidewater argued
that the § 727(a)(8) period was "equitably tolled" during Williams’s
three Chapter 13 proceedings, including the two that occurred prior
to accrual of Tidewater’s claim against Williams. If the waiting
period were in fact tolled during the three Chapter 13 proceedings, for
a total duration of two years and 234 days, Williams would not be
entitled to obtain a second Chapter 7 discharge under § 727(a)(8).
The bankruptcy court denied Tidewater’s motion for summary
judgment and granted summary judgment to Williams, holding that
§ 727(a)(8) did not provide grounds for denial of a discharge in her
case. Tidewater Fin. Co. v. Williams (In re Williams), 333 B.R. 68,
70 (Bankr. D. Md. 2005). The court reasoned that "[e]quitable tolling
is not applicable here because § 727(a)(8) does not define a limita-
tions period for Tidewater, a creditor, to assert its claim"; rather, it
"defines a condition that [Williams] was required to satisfy in order
to qualify for . . . a discharge of her debts." Id. at 73. Tidewater
appealed to the district court, which affirmed. Tidewater Fin. Co. v.
Williams, 341 B.R. 530 (D. Md. 2006).
Tidewater appeals the district court’s judgment affirming the order
of the bankruptcy court. We review de novo the judgment of a district
court sitting in review of a bankruptcy court. In re Merry-Go-Round
Enters., Inc., 400 F.3d 219, 224 (4th Cir. 2005). We apply to the
bankruptcy court judgment the same standard employed by the dis-
trict court. Id. Thus, we review the bankruptcy court’s factual findings
for clear error and its legal conclusions de novo. Id.
On appeal, Tidewater contends that: (1) § 727(a)(8) establishes a
statute of limitations that must be tolled; and (2) failure to toll
§ 727(a)(8) would create a "loophole" in the Bankruptcy Code. We
address each contention in turn.
II.
Tidewater’s first argument is that the six-year waiting period in
§ 727(a)(8) is a limitations period that the bankruptcy court should
6 TIDEWATER FINANCE v. WILLIAMS
have equitably tolled during Williams’s Chapter 13 proceedings. In
assessing this statutory argument, we begin, as always, with the text
of the statute. Limtiaco v. Camacho, 545 U.S. ___, 127 S. Ct. 1413,
1418 (2007). Section 727(a)(8) provides:
The court shall grant the debtor a discharge, unless . . . the
debtor has been granted a discharge under [Chapters 7 or
11], in a case commenced within six years before the date
of the filing of the petition.
11 U.S.C.A. § 727(a)(8) (West 2004).
Plainly, the statute itself — unlike other Code provisions — does
not expressly provide for tolling. Cf. 11 U.S.C. § 108(c) (2000)
(extending statutes of limitation for creditors when the automatic stay
bars their collection efforts). Notwithstanding this plain language,
Tidewater argues that tolling applies here because of the principle that
statutes of limitation are "customarily subject to ‘equitable tolling,’"
Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 95 (1990), unless toll-
ing would be "inconsistent with the text of the relevant statute."
United States v. Beggerly, 524 U.S. 38, 48 (1998).
Tidewater’s argument rests on a faulty premise: that § 727(a)(8) is
a statute of limitations. In fact, § 727(a)(8) imposes no limitations
period. "A statute of limitation requires a litigant to file a claim within
a specified period of time." Rector v. Approved Fed. Sav. Bank, 265
F.3d 248, 252 (4th Cir. 2001); see also Black’s Law Dictionary 927
(6th ed. 1990) (statutes of limitation "set[ ] maximum time periods
during which certain actions can be brought or rights enforced"). Sec-
tion 727(a)(8) does not "require[ ] a litigant" — here, Tidewater —
"to file [its] claim within a specified period of time." Rector, 265 F.3d
at 252. Instead, § 727(a)(8) conditions the ability of a debtor, like
Williams, to obtain a Chapter 7 discharge, by requiring her to wait six
years after initiating earlier proceedings that ended in a discharge.
Thus, as the bankruptcy court explained, § 727(a)(8) "does not define
a limitations period for Tidewater, a creditor, to assert its claim,"
rather it "defines a condition that the Debtor [Williams] was required
to satisfy in order to qualify for a benefit, namely, a discharge of her
debts." Tidewater, 333 B.R. at 73 (emphasis added).
TIDEWATER FINANCE v. WILLIAMS 7
Despite the fact that § 727(a)(8) does not set forth a "specified
period of time" in which Tidewater can assert its claim, Rector, 265
F.3d at 252, Tidewater insists that § 727(a)(8) is a limitations period
subject to equitable tolling. Tidewater principally relies on Young v.
United States, 535 U.S. 43, 47 (2002), in which the Court held that
other provisions in the Bankruptcy Code create a limitations period
subject to equitable tolling. But Young offers Tidewater no support
because the provisions at issue there differ vastly from § 727(a)(8).
The provisions at issue in Young are 11 U.S.C. §§ 507(a)(8)(A)(i)
and 523(a)(1)(A) (2000). The latter, § 523(a)(1)(A), excepts from a
discharge any tax "of the kind and for the periods specified in"
§ 507(a)(8).4 Section 507(a)(8) in turn grants priority to unsecured
income tax claims for which a return was due "after three years before
the date of the filing of the petition." Id. § 507(a)(8)(A)(i).5 As the
Young Court explained, these two provisions combine to provide that
"[i]f the IRS has a claim for taxes for which the return was due within
three years before the bankruptcy petition was filed, the claim enjoys
eighth priority under § 507(a)(8)(A)(i) and is nondischargeable in
bankruptcy." 535 U.S. at 46.
4
Section 523(a)(1)(A) provides in pertinent part:
Exceptions to discharge (a) A discharge under [select provisions
of the Code] does not discharge an individual debtor from any
debt— (1) for a tax or customs duty— (A) of the kind and for
the periods specified in . . . 507(a)(8) of this title . . . .
11 U.S.C. § 523(a)(1)(A).
5
Section 507(a)(8)(A)(i) provides in pertinent part:
Priorities (a) The following expenses and claims have priority in
the following order: . . . (8) Eighth, allowed unsecured claims of
governmental units, only to the extent that such claims are for—
(A) a tax on or measured by income or gross receipts— (i) for
a taxable year ending on or before the date of the filing of the
petition for which a return, if required, is last due, including
extensions, after three years before the date of the filing of the
petition.
11 U.S.C. § 507(a)(8)(A)(i).
8 TIDEWATER FINANCE v. WILLIAMS
The Court in Young held that this three-year period was a "limita-
tions period because it prescribe[d] a period within which certain
rights (namely, priority and nondischargeability in bankruptcy) may
be enforced" by the claimant, there the IRS. Id. at 47 (emphasis
added). Moreover, the Court noted that, like other statutes of limita-
tions, the three-year period in Young "commence[d] when the claim-
ant [the IRS] ha[d] a complete and present cause of action," i.e., when
the taxpayer’s return was due. Id. at 49.
Not only limitations periods, but all statutory periods to which
courts have applied equitable tolling principles, contain these same
two characteristics. First, they provide a plaintiff (in the bankruptcy
context, a creditor) with a specified period of time within which the
plaintiff must act to pursue a claim in order to preserve a remedy. See,
e.g., Young, 535 U.S. at 47 (plaintiff (IRS) must act to collect tax debt
or perfect tax lien within three years); Zipes v. Trans World Airlines,
455 U.S. 385, 393-95 (1982) (plaintiff must act to file charge of dis-
crimination with EEOC within 180 days); ICC v. Bhd. of Locomotive
Eng’rs, 482 U.S. 270, 277, 284-85 (1987) (plaintiff must petition for
review of final order of ICC within 60 days); Irwin, 498 U.S. at 92-
93 (plaintiff must act to file Title VII action within 30 days of receipt
of "right-to-sue" notice from EEOC). Second, such periods com-
mence when the plaintiff has (or discovers that he has) a "complete
and present cause of action." See Young, 535 U.S. at 48-49 (period
commences with failure to file tax return); Zipes, 455 U.S. at 393-95
(period commences with discriminatory conduct); ICC, 482 U.S. at
277, 284-85 (period commences with service of final administrative
order); Irwin, 498 U.S. at 92-93 (period commences with receipt of
"right-to-sue" notice).6 When these two circumstances exist, a court
will often toll a period if it concludes that equitable considerations
6
The dissent inexplicably takes issue with our citation of "non-
bankruptcy cases" to illustrate the characteristics of limitations periods.
See post at 27. Limitations periods exist in every sort of statutory
scheme, "represent[ing] a pervasive legislative judgment . . . that the
right to be free of stale claims in time comes to prevail over the right to
prosecute them." United States v. Kubrick, 444 U.S. 111, 117 (1979)
(internal quotation marks omitted) (emphasis added). No authority sug-
gests that limitations periods take on some unique character when located
in the Bankruptcy Code.
TIDEWATER FINANCE v. WILLIAMS 9
excuse a plaintiff’s failure to take the required action within the time
period. See Young, 535 U.S. at 50-51 (explaining that tolling is per-
mitted when "claimant has actively pursued his judicial remedies" or
"has been induced or tricked by his adversary’s misconduct into
allowing the filing deadline to pass") (internal quotation marks omit-
ted).
In stark contrast, the provision at issue here, § 727(a)(8), does not
contain either of these critical characteristics.7 First, it does not "pre-
scribe[ ] a period [of time] within which [a] certain right[ ]" may "be
7
Three lower-court cases (two of which are unpublished), which
treated another provision of the Bankruptcy Code as a limitations period,
constitute the only authority the dissent cites for its view that § 727(a)(8)
is a limitations period. See post at 27 (citing In re Womble, 299 B.R. 810
(N.D. Tex. 2003), aff’d on other grounds 108 Fed. Appx. 993 (5th Cir.
2004); In re Seeber, No. 03-19567, 2005 WL 4677823 (Bankr. E.D. La.
July 5, 2005); In re Riley, No. 01-4452, 2004 WL 2370640 (Bankr. D.
Haw. April 20, 2004)). Of course, these cases do not bind us and are per-
suasive only to the extent that they rest on a sound rationale. As the dis-
sent’s failure to discuss their reasoning suggests, they in fact provide no
persuasive rationale. Both Riley and Seeber rely on Womble, without fur-
ther analysis. In Womble, a district court in Texas affirmed a bankruptcy
court’s holding that Young required the tolling of 11 U.S.C.
§ 727(a)(2)(A) (2000) because it, like the statute in Young, (1) "refer-
ence[s] ‘the date of the filing of the petition’" and (2) "act[s] as [a] limi-
tations period[ ], requiring creditors to promptly protect their rights or
risk having a debt discharged in bankruptcy." 299 B.R. at 812. The court
offered no reason why a provision that "reference[s] ‘the date of the fil-
ing of the petition’" should automatically be interpreted as a limitations
provision; the dissent offers none and we can think of none. The remain-
ing rationale offered in Womble defines "limitations period" far too
broadly — not every provision that "requir[es] creditors to promptly pro-
tect their rights or risk having a debt discharged in bankruptcy" consti-
tutes a limitations period. After all, the mere possibility of discharge
"requir[es] creditors to promptly protect their rights or risk having a debt
discharged in bankruptcy." Thus, Womble and its progeny hardly consti-
tute "persuasive" authority for tolling § 727(a)(8). Moreover, the cases
interpreting 11 U.S.C. § 109(g)(2) (2000), which the dissent cites as an
example of tolling, post at 28, are even less useful here. Those cases toll
§ 109(g)(2) to cure a prior violation of that provision; here, not even
Tidewater suggests that Williams’s Chapter 13 filings violated the Code.
10 TIDEWATER FINANCE v. WILLIAMS
enforced" by the claimant, Tidewater. See Young, 535 U.S. at 47.
Instead, § 727(a)(8) prescribes a period of time a debtor must wait
before becoming eligible for a discharge. Second, the six-year period
in § 727(a)(8) does not "commence[ ] when the claimant [Tidewater]
ha[d] a complete and present cause of action." Young, 535 U.S. at 49.
Rather, the six-year period commences when the debtor initiates a
bankruptcy proceeding that led to a prior discharge, which may be, as
here, well before the claimant had "a complete and present cause of
action."
Although a creditor may incidentally benefit from the debtor’s
inability to obtain a discharge during the six-year period, the extent
of that benefit is entirely contingent on when the creditor’s claim
arose, i.e., when the debtor defaulted. Under the statute, the creditor
may benefit for a very long period (five years and 364 days), a very
short period (one day), or any time in between. If the debt accrued
shortly after the first discharge, the creditor could wait more than five
years to collect the debt, confident that the debtor could not obtain a
discharge.8 But in a case like that at hand, in which the creditor did
not obtain a judgment against the debtor until more than four years
after the initial discharge, the debtor will become eligible for another
discharge in less than two years. If Congress had intended § 727(a)(8)
to guarantee creditors six years of nondischargeability to enforce their
claims, the statutory period would run from the accrual of the credi-
tor’s claim — instead of running from the initiation of a proceeding
that may, as here, well predate that claim.9
8
In some cases, even this confidence would be misplaced. If through
a novation or some other device a second debtor (entitled to a discharge)
was substituted for the unentitled debtor, then § 727(a)(8) would no lon-
ger bar the discharge of the same debt that it earlier affected. This is pos-
sible because § 727(a)(8) makes specific debtors ineligible for discharge,
rather than, like the provisions in Young, making specific debts immune
from discharge.
9
We note that some courts have read § 727(a), which provides that
"[t]he court shall grant the debtor a discharge, unless" one of several con-
ditions is met, to vest bankruptcy courts with discretion to grant a dis-
charge even when a ground for denying discharge is present. See, e.g.,
Union Planters Bank v. Connors, 283 F.3d 896, 901 (7th Cir. 2002). The
Supreme Court, however, has said that "[u]nder § 727(a), the court may
TIDEWATER FINANCE v. WILLIAMS 11
Tidewater utterly ignores the critical differences between
§ 727(a)(8) and the provisions at issue in Young. Instead, Tidewater
contends that because both § 727(a)(8) and the Young provisions set
forth "lookback" periods, both must set forth limitations periods. The
contention is meritless. "Lookback" simply describes how a statutory
provision measures a period of time, not whether it constitutes a
period subject to tolling. The Court tolled the period in Young not
because it happened to measure time by looking backwards, but
because it was a limitations period and equity required the application
of tolling principles. In contrast, as demonstrated above, § 727(a)(8)
lacks the defining characteristics of a limitations period. Moreover,
§ 727(a)(8) advances different policies than those served by limita-
tions periods. As the Supreme Court has explained, limitations peri-
ods like that in Young further policies of "repose, elimination of stale
claims, and certainty about a plaintiff’s opportunity for recovery and
a defendant’s potential liabilities." Young, 535 U.S. at 47 (emphasis
added). In contrast, § 727(a)(8) serves an entirely different purpose:
deterring serial Chapter 7 bankruptcies by requiring defendant debtors
to wait a specified period of time between Chapter 7 discharges.
Furthermore, as the district court recognized, adopting Tidewater’s
position would be at odds with the overall statutory scheme set forth
in the Bankruptcy Code. Under Tidewater’s view, a debtor, like Wil-
liams, could only attempt to utilize Chapter 13 to reorganize and pay
down her debt if she were willing to extend the period she would have
not grant a discharge of any debts if" one of the conditions is met. Kontr-
ick v. Ryan, 540 U.S. 443, 447 n.1 (2004) (dicta). Neither party argues
that § 727(a) vests district courts with discretion to grant a discharge
even when a ground for denial is present. Moreover, if § 727(a) does in
fact vest bankruptcy courts with discretion to grant a discharge even
when a ground for denial is present, Tidewater’s case is even weaker.
Under that interpretation, Williams could receive a discharge even if she
had initiated this proceeding within the § 727(a)(8) six-year period —
because the bankruptcy court could exercise its discretion to nonetheless
grant a discharge. In that event it is even more difficult to conclude that
§ 727(a)(8) grants creditors a period of nondischargeability because the
debts would be dischargeable, at the district court’s discretion. For these
reasons, in the case at hand we assume without deciding that a debtor is
ineligible for discharge if one of the § 727(a) conditions is met.
12 TIDEWATER FINANCE v. WILLIAMS
to wait before possibly receiving a discharge under Chapter 7. This
would discourage honest debtors from using Chapter 13 to pay their
debts with the hope of avoiding a second Chapter 7 proceeding —
because an unsuccessful Chapter 13 proceeding, even one filed in
good faith, would extend the waiting period set by § 727(a)(8).
In addition, as the district court also observed, Tidewater’s
approach would allow all creditors to benefit from equitable tolling
— even those that were not at all affected by the Chapter 13 proceed-
ing that caused the tolling. See Tidewater, 341 B.R. at 537-38. This
case provides an example. Tidewater’s claim against Williams arose
after her second Chapter 13 proceeding. Yet Tidewater contends that
somehow it should receive the benefit of tolling the § 727(a)(8)
period during Williams’s first two Chapter 13 proceedings — time in
which it had no claim against Williams that could have been affected
by the automatic stay in those proceedings. Under Tidewater’s theory,
it would still benefit from tolling during the first two Chapter 13 pro-
ceedings even if Williams had already paid the debts of all those cred-
itors affected by the automatic stay in those proceedings.
For all of these reasons, we can only conclude that the bankruptcy
and district courts properly held that § 727(a)(8) is not a limitations
period and tolling has no place here.
III.
Tidewater also argues that failing to toll § 727(a)(8) leaves a "loop-
hole" in the Bankruptcy Code, which "allows a debtor to file a peti-
tion for relief under Chapter 7 and receive a discharge, then file,
dismiss[,] and refile Chapter 13 petitions and cloak themselves [sic]
with the automatic stay until six calendar years elapse." This conten-
tion must necessarily fail given our conclusion that § 727(a)(8) is not
a statute to which tolling principles could apply. In any event, how-
ever, the "loophole" argument is singularly unpersuasive. For Con-
gress has provided bankruptcy courts with several tools to remedy any
"loophole" of the sort feared by Tidewater.
First, 11 U.S.C. § 105(a) (2000) authorizes bankruptcy courts to
"issue any order, process, or judgment that is necessary or appropriate
to carry out the provisions of [Title 11]." It states that "[n]o provision
TIDEWATER FINANCE v. WILLIAMS 13
of this title providing for the raising of an issue by a party in interest
shall be construed to preclude the court from, sua sponte, taking any
action or making any determination necessary or appropriate to
enforce or implement court orders or rules, or to prevent an abuse of
process." Id. (emphasis added). If a bankruptcy court found that a
debtor was abusing Chapter 13 in the manner Tidewater fears,
§ 105(a) empowers the court to remedy that abuse.
Moreover, although the automatic stay that accompanies Chapter
13 filings bars creditor collection efforts, 11 U.S.C. § 362 (2000)
allows creditors to request relief from the stay "for cause." Thus, if
a creditor demonstrated that a debtor had filed a Chapter 13 proceed-
ing in bad faith, the creditor could request relief from the stay from
the court. Furthermore, if a debtor sought to dismiss a Chapter 13
action in order to avoid the bankruptcy court’s judgment on that
relief, such dismissal would bar the debtor from filing another bank-
ruptcy petition for 180 days, giving creditors a window in which to
pursue their claims. 11 U.S.C. § 109(g)(2) (2000).
Additionally, the Bankruptcy Abuse Prevention and Consumer Pro-
tection Act of 2005 provides that if a debtor files a Chapter 13 peti-
tion within a year of dismissing a prior one, the automatic stay
generally dissolves after 30 days. See 11 U.S.C.A. § 362(c)(3) (West
2007). And if the debtor dismisses and refiles more than two Chapter
13 petitions within a year, the automatic stay does not go into effect
upon the filing of a third or subsequent petition. See id. § 362(c)(4).
Although a debtor can argue that the stay should be in effect, the
debtor bears the burden of rebutting, by clear and convincing evi-
dence, a presumption that he or she filed the most recent petition in
bad faith. See id. § 362(c)(3)-(4).10
Further, a debtor who successively files and dismisses Chapter 13
10
These amendments appeared in a section of the Act entitled "Dis-
couraging Bad Faith Repeat Filing." Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 § 302. See also id. § 303 (titled "Curb-
ing Abusive Filings"); id. § 312 (titled "Extension of Period between
Bankruptcy Discharges"). Plainly, Congress was aware of the type of
mischief Tidewater describes and enacted measures to remedy it — mea-
sures that do not include the equitable tolling of § 727(a)(8).
14 TIDEWATER FINANCE v. WILLIAMS
cases risks losing, forever, her ability to obtain a discharge of the
debts that would have been dischargeable in those Chapter 13 pro-
ceedings. The Bankruptcy Code, 11 U.S.C. § 349(a) (2000), allows a
court dismissing a bankruptcy petition, for "cause," to order that the
dismissal of the petition bars the later discharge of any debts that
could have been discharged in the initial proceeding.
Thus, Congress has provided bankruptcy courts with numerous
measures to ward off the dire "loophole" scenario Tidewater fore-
casts. Significantly, each of the anti-serial-filing measures discussed
above allows the bankruptcy court to make an individualized determi-
nation of whether the debtor is acting in good faith. This permits hon-
est debtors to make full use of the bankruptcy system, while
empowering bankruptcy courts to screen out bad-faith petitioners,
precisely as Congress intended.
IV.
Our dissenting colleague would instead defy congressional intent
by "tolling" the § 727(a)(8) period during the pendency of a debtor’s
Chapter 13 proceeding. To reach this result, the dissent must contend
that § 727(a)(8) is something that it manifestly is not — a limitations
period. The weakness of the argument offered by the dissent in sup-
port of this contention actually demonstrates the critical differences
between § 727(a)(8) and limitations periods like that in Young.
A.
The dissent concedes that § 727(a)(8), unlike "typical" limitations
periods — including that in Young, does not set forth a specified
period of time that commences when the plaintiff (here Tidewater)
has or discovers it has a "complete and present cause of action."
Young, 535 U.S. at 49 (emphasis added); see post at 28-29. The dis-
sent attempts to dismiss this difference by maintaining it "has no
intrinsic significance" because a "statute may operate as a limitations
period . . . by referencing any measuring point." Post at 28. Tellingly,
the dissent offers no support for this contention.
The treatises on which the Supreme Court relied in Young clearly
reject this novel theory. They teach that "[s]tatutes of limitation com-
TIDEWATER FINANCE v. WILLIAMS 15
mence to run against a cause of action from the time it accrues, or
from the time when the holder thereof has the right to apply to the
court for relief, and to commence proceedings to enforce his rights."
1 H.G. Wood, Limitation of Actions § 122a, at 684 (Dewitt C. Moore,
ed., 4th ed. 1916), cited approvingly in Young, 535 U.S. at 47, 49; see
also id. § 117, at 612 ("[T]he statute of limitations only begins to run
from the time when the right of action accrues . . . ."); id. § 117, at
616 ("[T]he statute of limitations does not begin to run until there is
a demand capable of present enforcement . . . ."); id. § 119, at 627
("[T]he different periods within which the remedies for the cases pro-
vided for are to be pursued are to be reckoned . . . from the time the
respective causes of action accrue . . . ."); accord 1 Calvin W. Cor-
man, Limitation of Actions § 6.1, at 373 (1991) ("Because statutes of
limitations do not begin to run against a cause until the action accrues,
they are useful in preventing stale claims. The plaintiff cannot be
charged with delay before his or her cause of action has accrued, as
it would be unreasonable for any legal system to commence the run-
ning of its statute of limitations before suit can legally be brought."),
cited approvingly in Young, 535 U.S. at 49.
Thus, it has been long established that limitations periods begin to
run when the claim they govern accrues. That continues to be the law.
See, e.g., Teamsters & Employers Welfare Trust v. Gorman Bros.
Ready Mix, 283 F.3d 877, 880 (7th Cir. 2002) (Posner, J.) ("A statute
of limitations cuts off the right to sue at a fixed date after the plain-
tiff’s cause of action accrued."); Stuart v. Am. Cyanamid Co., 158
F.3d 622, 627 (2d Cir. 1998) ("[A] statute of limitations establishes
the time period within which lawsuits may be commenced after a
cause of action has accrued."); 51 Am. Jur. 2d Limitation of Actions
§ 9 (2d ed. 2000) ("a ‘statute of limitations’ establishes a fixed period
of time within which lawsuits must be commenced after a cause of
action has accrued"); see also Ledbetter v. Goodyear Tire & Rubber
Co., 127 S. Ct. 2162, 2171 n.3 (2007).
In sum, contrary to the dissent’s unsupported assertion, limitations
periods run from the accrual of the cause of action they govern — not
from "any measuring point."11 Because the § 727(a)(8) period does
11
The discovery rule does not change this principle, but rather "allows
[a] cause of action to accrue when the litigant first knows or with due dil-
igence should know facts that will form the basis for an action." 2 Cor-
man, Limitation of Actions § 11.1.1, at 134.
16 TIDEWATER FINANCE v. WILLIAMS
not begin to run from the accrual of the creditor’s claim, it does not
"cut[ ] off [a remedy] at a fixed date after th[at] . . . cause of action
accrued" and so is not a limitations period. Gorman Bros., 283 F.3d
at 880.
B.
Moreover, although the dissent argues to the contrary, § 727(a)(8)
fails to serve one of the critical purposes of all limitations periods,
including that in Young.
The Supreme Court in Young held that "all limitations provisions"
serve the purposes of "repose, elimination of stale claims, and cer-
tainty" regarding parties’ rights. 535 U.S. at 47 (quoting Rotella v.
Wood, 528 U.S. 549, 555 (2000)) (emphasis added). The dissent con-
tends generally that § 727(a)(8) serves the same purposes as the limi-
tations period in Young, post at 26, but then does not even attempt to
demonstrate that § 727(a)(8) "eliminat[es] stale claims." See post at
26-27 (discussing the statute’s furtherance of policies of "repose, cer-
tainty, etc." but omitting any discussion of how § 727(a)(8) furthers
"elimination of stale claims").
This omission is startling, since the elimination of stale claims is
the raison d’être of statutes of limitations. See, e.g., Beach v. Ocwen
Fed. Bank, 523 U.S. 410, 415 (1998) ("[T]he object of a statute of
limitation [is to] keep[ ] stale litigation out of the courts . . . .") (inter-
nal quotation marks omitted); United States v. Kubrick, 444 U.S. 111,
117 (1979) ("Statutes of limitations . . . represent a pervasive legisla-
tive judgment that . . . the right to be free of stale claims in time
comes to prevail over the right to prosecute them.") (internal quota-
tion marks omitted); Guaranty Trust Co. v. United States, 304 U.S.
126, 136 (1938) ("The statute of limitations is . . . designed to protect
the citizens from stale and vexatious claims . . . ."); Weber v. Bd. of
Harbor Comm’rs, 85 U.S. 57, 70 (1873) ("Statutes of limitation . . .
protect[ ] parties from the prosecution of stale claims . . . ."); see also
Lekas v. United Airlines, Inc., 282 F.3d 296, 299 (4th Cir. 2002)
("[T]he public-interest policy for limitations periods [is] that at some
point the right to be free of stale claims . . . comes to prevail over the
right to prosecute them.") (omission in the original) (internal quota-
tion marks omitted). Surely it was for this reason that the Supreme
TIDEWATER FINANCE v. WILLIAMS 17
Court in Young held that one of the purposes served by "all limita-
tions provisions" is "eliminat[ing] stale claims." 535 U.S. at 47 (quot-
ing Rotella, 528 U.S. at 555) (emphasis added).
The dissent must avoid discussing whether § 727(a)(8) eliminates
"stale claims" because the statute obviously does not serve this pur-
pose. The expiration of the § 727(a)(8) period bears no relation to the
age of a creditor’s claim. Some creditors may benefit from the debt-
or’s ineligibility for discharge for nearly six years; other creditors
may lose the benefit the very day after their claim arises. To the
extent § 727(a)(8) "eliminates" claims, it arbitrarily cuts down stale
and very fresh claims alike. For this reason, it does absolutely nothing
to further a critical policy — eliminating stale claims — served by
"all," Young, 535 U.S. at 47, limitations periods.
In sum, the dissent’s own arguments conclusively demonstrate that
§ 727(a)(8) neither constitutes a statute of limitations nor serves the
purposes animating such statutes.
V.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
DUNCAN, Circuit Judge, concurring:
I concur in the majority opinion in this case. I briefly write sepa-
rately because I am not unsympathetic to the concerns articulated by
the dissent; I simply disagree that this is the appropriate forum in
which to address them.
Under the Bankruptcy Code, the only relevant limitation imposed
on Williams is that she not have "been granted a discharge under
[Chapters 7 or 11], in a case commenced within six years before the
date of the filing of the petition." 11 U.S.C. § 727(a)(8) (2000). Con-
gress may well wish to comprehensively address the problem, identi-
fied by the dissent, created by a debtor who initiates multiple Chapter
13 proceedings between separate Chapter 7 petitions. Congress has
18 TIDEWATER FINANCE v. WILLIAMS
already constrained the relief available to Chapter 7 debtor-petitioners
by expanding the waiting period between such filings from six to
eight years. U.S.C.A. § 727(a)(8) (West 2007). It may similarly wish
to exclude from that eight-year period any length of time during
which Chapter 13 petitions are pending. To date, however, Congress
has not done so, and I am reluctant to fill that gap in a manner that
does not comport with the express statutory language.
My reluctance is compounded by the fact that Tidewater had sev-
eral avenues of relief that were available to it here, but that it chose
not to pursue. Obviously, it could have sought to protect its claim dur-
ing the significant period available to it, instead of choosing, for
unexplained reasons, not to do so. Further, it could have petitioned the
court to terminate or condition the stays Williams received. 11 U.S.C.
§ 362(d). Such relief would have been particularly appropriate if, as
Tidewater insinuates although never actually alleges, Williams’s fil-
ings were in bad faith. Given its lack of diligence and absence of prej-
udice, Tidewater seems an unlikely candidate to claim the benefit of
equitable tolling.
In lieu of the finely-tuned relief that was available to Tidewater on
these facts, the dissent’s view of the statute would turn the waiting
period imposed on debtors into a statute of limitations subject to equi-
table tolling for the benefit of all creditors, whether or not prejudiced
or deserving. I would prefer clearer Congressional guidance before
interpreting a statutorily defined waiting period in such a manner.
NIEMEYER, Circuit Judge, dissenting:
This Chapter 7 bankruptcy proceeding is the fifth bankruptcy pro-
ceeding that Deborah Williams has commenced since 1996. Tidewa-
ter Finance Company, a creditor of Williams, contends that Williams
is not entitled to a discharge of debts because her petition was filed
without allowing for the six-year period of nondischargeability of
debts to elapse. See 11 U.S.C. § 727(a)(8) (precluding discharge in
Chapter 7 proceeding if debtor had been granted a discharge in a
Chapter 7 proceeding filed within six years before the commencement
date of the present proceeding). Even though more than six calendar
years elapsed between the filing dates of Williams’ two Chapter 7
proceedings, Tidewater Finance argues that the six-year period of
TIDEWATER FINANCE v. WILLIAMS 19
nondischargeability should be calculated by excluding periods during
which Williams was pursuing three Chapter 13 proceedings and col-
lection of her debts was stayed under 11 U.S.C. § 362(a).
I agree. Under the fully applicable reasoning of Young v. United
States, 535 U.S. 43 (2002), § 727(a)(8)’s six-year period of nondis-
chargeability should have been tolled during the pendency of Wil-
liams’ three Chapter 13 petitions, when her creditors were denied
their rights to enforce and collect her debts due to the Bankruptcy
Code’s automatic stay. See 11 U.S.C. § 362(a). Therefore, Williams
is ineligible to receive a discharge in this proceeding, and Tidewater
Finance is entitled to summary judgment to that effect. Accordingly,
I would reverse.
I
Deborah Williams financed the purchase of an automobile in Octo-
ber 1997, signing a purchase money note and security agreement.
After the note and security agreement were assigned to Tidewater
Finance Company, Williams defaulted, and the automobile was repos-
sessed and sold. In July 2001, Tidewater Finance obtained a defi-
ciency judgment against Williams in Virginia state court in the
amount of $7,468.84 plus interest. Tidewater Finance has not yet
obtained satisfaction of the judgment, in large part because Williams
has lingered in multiple bankruptcy proceedings.
Over the course of eight years, from 1996 to 2004, Williams filed
five bankruptcy petitions, as follows:
Chapter Filing Disposition Length of
Date pendency
7 10/29/1996 Discharge of debts 104 days
on 2/10/1997
13 9/21/1999 Dismissed on 11/2/1999 42 days
13 5/16/2000 Dismissed on 1/25/2001 254 days
13 8/14/2001 Dismissed on 9/11/2003 758 days
7 3/15/2004 Pending
She first filed a Chapter 7 bankruptcy petition on October 29, 1996,
and obtained a discharge of debts. Having received this fresh start,
20 TIDEWATER FINANCE v. WILLIAMS
Williams incurred new debts, including the automobile debt owed to
Tidewater Finance. After incurring the Tidewater Finance debt, she
filed Chapter 13 bankruptcy petitions on three separate occasions:
September 21, 1999, May 16, 2000, and August 14, 2001. Williams
voluntarily dismissed each of them, as authorized by 11 U.S.C.
§ 1307(b), before completing payments and obtaining a discharge.
Lastly, she filed her second and currently pending Chapter 7 petition
on March 15, 2004, seeking a discharge of all dischargeable debts,
including her debt to Tidewater Finance.
Even though this last Chapter 7 petition was filed over seven years
after Williams commenced her previous Chapter 7 proceeding, the
seven years were interspersed with three Chapter 13 proceedings that
Williams commenced. During the nearly three years that her Chapter
13 proceedings were pending, Williams benefited from automatic
stays of her creditors’ efforts to collect debts. See 11 U.S.C. § 362(a).
Tidewater Finance commenced this action and filed a motion for
summary judgment to oppose discharge in the currently pending
Chapter 7 proceeding, claiming that Williams was not eligible for a
discharge because she did not allow six years of nondischargeability
to elapse between filings, as required by the "lookback" period of 11
U.S.C. § 727(a)(8).1 Tidewater Finance acknowledged that Williams
commenced her initial Chapter 7 case, in which a discharge was
granted, more than six years before she filed the pending Chapter 7
petition. But it argued that the two years and 324 days during which
Williams’ Chapter 13 petitions were pending and debt collection was
stayed are excluded from the six-year lookback period, under the
principle of equitable tolling. Therefore, her current Chapter 7 peti-
tion was filed too soon to allow creditors the six-year period provided
for in § 727(a)(8). Accordingly, she is ineligible for a discharge of
debts in her present Chapter 7 case.
1
The Bankruptcy Abuse Prevention and Consumer Protection Act of
2005 made extensive changes to the Bankruptcy Code, including extend-
ing the lookback period under 11 U.S.C. § 727(a)(8) to eight years. See
Pub. L. No. 109-8, § 312(1), 119 Stat. 38. The pre-2005 version of the
Bankruptcy Code governs this case because Williams filed her Chapter
7 petition before the 2005 Act took effect. Therefore all citations in this
opinion refer to the pre-2005 Code, unless otherwise noted.
TIDEWATER FINANCE v. WILLIAMS 21
The bankruptcy court rejected Tidewater Finance’s equitable toll-
ing argument and denied its motion for summary judgment, and the
district court affirmed. Reasoning as the bankruptcy court did, the dis-
trict court stated that "equitable tolling is inconsistent with the text of
§ 727(a)(8)" and that "even if § 727(a)(8) were subject to equitable
tolling, it would be inappropriate to apply that doctrine here because
Tidewater voluntarily chose not to protect its rights during the period
between Williams’ Chapter 7 cases."
From the order of the district court, Tidewater Finance filed this
appeal, raising the sole issue of whether § 727(a)(8)’s six-year look-
back period should exclude the time during which Williams was pro-
tected by Chapter 13 proceedings from the creditors’ efforts to collect
debts.
II
Because the resolution of this issue involves the construction of
several provisions of the Bankruptcy Code, I begin with a recitation
of the statutory scheme in which § 727(a)(8) functions.
Chapter 7 of the Bankruptcy Code provides for the liquidation and
distribution of the assets of a debtor upon being adjudged bankrupt
and discharged of debts. See 11 U.S.C. § 701 et seq. Under this pro-
ceeding, creditors usually receive a portion of the proceeds in lieu of
full repayment of debts, and the debtor receives a fresh start through
the discharge. See 1 Collier on Bankruptcy ¶ 1.03[2] (15th ed. 2006).
The discharge absolves the debtor of all debts existing when the
Chapter 7 petition was filed, except for certain debts deemed nondis-
chargeable by 11 U.S.C. § 523. See 11 U.S.C. §§ 727(b), 524.
Because a Chapter 7 discharge is such strong medicine, the debtor
may receive it only upon satisfying the conditions stated in 11 U.S.C.
§ 727(a). See 11 U.S.C. § 727(a); see also Kontrick v. Ryan, 540 U.S.
443, 447 (2004). One of these conditions is the passage of a six-year
period of nondischargeability, as provided in § 727(a)(8):
The court shall grant the debtor a discharge, unless . . . the
debtor has been granted a discharge under [Chapter 7 or
22 TIDEWATER FINANCE v. WILLIAMS
Chapter 11] in a case commenced within 6 years before the
date of the filing of the petition.
11 U.S.C. § 727(a)(8) (2000). Section 727(a)(8) thus prescribes a six-
year period during which a debtor is not entitled to protection against
creditors — a period of nondischargeability of debts incurred after a
debtor obtained a fresh start under Chapter 7.
Section 727(a)(8)’s "unmistakable purpose" is "to prevent the cre-
ation of a class of habitual bankrupts — debtors who might repeatedly
escape their obligations as frequently as they chose by going through
repeated bankruptcy." Perry v. Commerce Loan Co., 383 U.S. 392,
399 (1966). This purpose, "the prevention of recurrent avoidance of
debts," id. at 402, is clearly evident from the history of the six-year
period of nondischargeability. Through an oversight, the Bankruptcy
Act of 1898 placed no restrictions on how often a debtor could obtain
discharges under Chapter 7. Concerned that certain individuals were
obtaining repeated, frequent discharges in bankruptcy, Congress
enacted the six-year limitation in 1903. See Act of February 3, 1903,
ch. 487, § 4, 32 Stat. 797; see also In re Seaholm, 136 F. 144, 146
(1st Cir. 1905) (recounting the legislative history). Accordingly, a six-
year period of nondischargeability of debts must now follow a debt-
or’s discharge under Chapter 7.
Because the six-year limitation is imposed on the current petition
and is determined by looking back to the previously filed petition in
which a discharge was obtained, it is referred to as a "lookback"
period. See Young v. United States, 535 U.S. 43, 46 (2002).
Section 727(a)(8)’s period of nondischargeability defines certain
rights of a creditor in tandem with those of a debtor. The very term
"debtor" implies the existence of a creditor who would enforce his
right to collect monies owed from the debtor. The creditor’s rights are
the inverse of the debtor’s. By making debts nondischargeable for six
years, § 727(a)(8) provides a creditor a six-year period within which
to lend monies to the debtor and collect them without risk that the
debtor may avoid his obligations through a discharge under Chapter
7.
Chapter 13 provides individual debtors with an alternative method,
distinct from Chapter 7’s liquidation method, for dealing with debts
TIDEWATER FINANCE v. WILLIAMS 23
in bankruptcy, altering the rights of such debtors and their creditors
during the six-year period of nondischargeability. Chapter 13 permits
wage-earning debtors, who often lack substantial assets, to repay their
debts, under the bankruptcy court’s protection, according to an exten-
sion or composition plan funded out of future earnings. See 8 Collier
on Bankruptcy ¶ 1300.02. While the Chapter 13 plans often permit the
debtor to repay less than the full amount of their debts, Chapter 13
nonetheless promotes repayment by providing a framework for the
orderly payment of debts out of future income that would be unavail-
able if the creditor tried to enforce its judgment by the liquidation of
a debtor’s few assets. See H.R. Rep. No. 595, at 117-18 (1977), ("The
benefit [of Chapter 13] to creditors is self-evident: their losses will be
significantly less than if their debtors opt for straight bankruptcy").
Generally speaking, under the pre-2005 Code, a debtor could file
a Chapter 13 petition and receive a discharge at any point, even
immediately after obtaining a Chapter 7 discharge.2 Cf. Young, 535
U.S. at 46 (noting that "the Code does not prohibit back-to-back
Chapter 13 and Chapter 7 filings"); see also 8 Collier on Bankruptcy
¶ 1300.40[4]. But this possibility of a debtor entering Chapter 13 pro-
ceedings soon after a Chapter 7 discharge was not intended to under-
mine § 727(a)(8)’s goal of preventing debtors from repeatedly
escaping their obligations and granting creditors a period to lend and
collect money safely. See Perry, 383 U.S. at 399; see also Deans v.
O’Donnell, 692 F.2d 968, 972 (4th Cir. 1982) ("Congress never
intended, of course, that Chapter 13 serve as a haven for debtors who
wish to receive a discharge of unsecured debts without making an
honest effort to pay those debts"). While a debtor could avail himself
of Chapter 13 within § 727(a)(8)’s six-year period of nondischargea-
bility, the intended function of Chapter 13 remained the facilitation
of the debtor’s payment, not avoidance, of debts. Indeed, upon a debt-
2
Under the 2005 amendments, a debtor may not obtain a Chapter 13
discharge in a case filed within two years of the filing of an earlier Chap-
ter 13 petition that yielded a discharge, or within four years of the filing
of an earlier Chapter 7, 11, or 12 petition that yielded a discharge. See
11 U.S.C.A. § 1328(f) (West 2007). Also under the 2005 amendments,
the automatic stay of § 362 for a Chapter 13 petition is subject to qualifi-
cations if the debtor filed and dismissed a Chapter 13 petition in the pre-
vious year. See id. § 362(c)(3), (4).
24 TIDEWATER FINANCE v. WILLIAMS
or’s receiving a Chapter 13 discharge, the six-year period of nondis-
chargeability under Chapter 7 began again. See 11 U.S.C. § 727(a)(9)
(denying a Chapter 7 discharge if debtor received a Chapter 13 dis-
charge within preceding six years).
Contrary to the intended operation of Chapter 13, however, certain
features of its procedure created a loophole through which debtors
could avoid their obligations through serial bankruptcy filings,
thereby undermining § 727(a)(8)’s six-year period of nondischargea-
bility. As noted, upon the filing of a Chapter 13 petition, a debtor ben-
efits from an automatic stay of any creditor action during the
pendency of the petition. See 11 U.S.C. § 362(a). Yet, in keeping with
the voluntary nature of Chapter 13 proceedings, § 1307(b) provides
that "[o]n request of the debtor at any time . . . the court shall dismiss
a case" filed under Chapter 13. (Emphasis added). Section 1307(b)
thus permits the debtor to exit Chapter 13 at any point, having
enjoyed the protection of the automatic stay and yet without having
had to pay anything to creditors, nor having had to proceed to a dis-
charge that would restart the clock on Chapter 7’s six-year period of
nondischargeability. Because the debtor controls the initiation and ter-
mination of the Chapter 13 proceeding, he could file a series of Chap-
ter 13 proceedings, obtaining a stay with each filing, and thereby
erode or even destroy the period of nondischargeability afforded cred-
itors by § 727(a)(8). Thus, a debtor could obtain a Chapter 7 dis-
charge; incur new debts that would be nondischargeable during the
six-year period; immediately file a Chapter 13 petition and invoke the
automatic stay of § 362(a); dismiss the Chapter 13 petition after the
six-year period has run but before receiving a Chapter 13 discharge;
and then file a Chapter 7 petition and receive a discharge of debts that
were previously nondischargeable under § 727(a)(8).
The Supreme Court in Young, 535 U.S. 43 (2002), confronted this
loophole in a related context and closed it by applying principles of
equitable tolling. I would do the same here.
In Young, the Internal Revenue Service attempted to prevent debt-
ors from obtaining a Chapter 7 discharge of a tax debt that appeared
to fall outside of the three-year lookback period of nondischargea-
bility of tax debts, established by 11 U.S.C. §§ 523(a)(1)(A) and
507(a)(8). 535 U.S. at 46-47. Section 523(a)(1)(A) deems nondischar-
TIDEWATER FINANCE v. WILLIAMS 25
geable, among other debts, a tax "of the kind and for the periods spec-
ified in section . . . 507(a)(8)." Section 507(a)(8)(A) in turn
establishes priority of "unsecured claims of governmental units" for
an income tax "for a taxable year ending on or before the date of the
filing of the [bankruptcy] petition for which a return, if required, is
last due, including extensions, after three years before the date of the
filing of the petition." Read together, these sections provide that if a
governmental unit has a claim for taxes for which the return was due
within the three years that preceded the bankruptcy petition’s filing,
the tax debt is deemed nondischargeable by § 523(a)(1)(A). See
Young, 535 U.S. at 46.
Like Williams, the debtors in Young had filed and voluntarily dis-
missed a Chapter 13 petition, the pendency of which triggered the
§ 362(a) automatic stay and prevented the IRS from collecting the
debt during the three-year lookback period. After the lookback period
ended, the debtors filed a Chapter 7 petition, seeking a discharge of
the tax debt. The Young Court described the loophole, which is the
same I described above, as follows:
Since the Code does not prohibit back-to-back Chapter 13
and Chapter 7 filings (as long as the debtor did not receive
a discharge under Chapter 13, see §§ 727(a)(8), (9)), a
debtor can render a tax debt dischargeable by first filing a
Chapter 13 petition, then voluntarily dismissing the petition
when the lookback period for the debt has lapsed, and
finally refiling under Chapter 7. During the pendency of the
Chapter 13 petition, the automatic stay of § 362(a) will pre-
vent the IRS from taking steps to collect the unpaid taxes,
and if the Chapter 7 petition is filed after the lookback
period has expired, the taxes remaining due will be dis-
chargeable.
535 U.S. at 46.
To close the loophole, the Court applied equity, reasoning that the
three-year lookback period "is a limitations period subject to tradi-
tional principles of equitable tolling." 535 U.S. at 47. The Court
affirmed that "limitations periods are customarily subject to ‘equitable
tolling,’ unless tolling would be inconsistent with the text of the rele-
26 TIDEWATER FINANCE v. WILLIAMS
vant statute." Id. at 49 (quotation marks and citations omitted). Tradi-
tionally, tolling has been applied in cases "where the claimant has
actively pursued his judicial remedies by filing a defective pleading
during the statutory period, or where the complainant has been
induced or tricked by his adversary’s misconduct into allowing the fil-
ing deadline to pass.’" Id. at 50 (quoting Irwin v. Dep’t of Veterans
Affairs, 498 U.S. 89, 96 (1990)). Despite the absence of these tradi-
tional reasons for tolling, the Young Court concluded that tolling of
the three-year lookback period was appropriate in bankruptcy to close
the loophole: "The Youngs’ Chapter 13 petition erected an automatic
stay under § 362, which prevented the IRS from taking steps to pro-
tect its claim. When the Youngs filed a petition under Chapter 7, the
three-year lookback period therefore excluded time during which their
Chapter 13 petition was pending." Id. at 50. The very fact that "the
IRS was disabled from protecting its claim during the pendency of the
Chapter 13 petition" justified the tolling of the three-year period. Id.
(emphasis added).
The instant case resembles Young in all material respects. Young
concluded that the three-year lookback period of § 523(a)(1)(A) "is a
limitations period because it prescribes a period within which certain
rights (namely, priority and nondischargeability in bankruptcy) may
be enforced." See Young, 535 U.S. at 47. Likewise, the six-year look-
back period of § 727(a)(8) is a limitations period because it prescribes
a period within which a certain right — nondischargeability under
Chapter 7 — may be enforced. The Young Court then focused on the
fact that "the lookback period serves the same ‘basic policies [fur-
thered by] all limitations provisions: repose, elimination of stale
claims, and certainty about a plaintiff’s opportunity for recovery and
a defendant’s potential liabilities.’" Id. at 47 (quoting Rotella v.
Wood, 528 U.S. 549, 555 (2000)). Section 787(a)(8) provides a mea-
sure of repose: after the six-year lookback period elapses, debts
become fully dischargeable, subject to Chapter 7’s provisions. And
§ 787(a)(8) provides creditors and debtors with certainty that during
the six-year lookback period, debts may not be discharged under
Chapter 7. Given the similarities between the lookback periods in
Young and this case, as well as the reasoning of Young, one must con-
clude that § 727(a)(8) is a limitations period and therefore subject to
tolling.
TIDEWATER FINANCE v. WILLIAMS 27
The majority opinion, however, reaches the opposite conclusion,
holding that § 727(a)(8) is not a limitations period and therefore is not
subject to tolling. Ante at 7. Citing non-bankruptcy cases that do not
purport to define a "limitations period," the majority declares two
required elements of a limitations period subject to tolling: the provi-
sion of "a specified period of time within which the plaintiff must act
to pursue a claim in order to preserve a remedy," and the period’s
"commenc[ement] when the plaintiff has (or discovers that he has) a
complete and present cause of action." Ante at 8-9 (citations omitted).
While these elements accurately describe many statutes of limita-
tions, neither Young, the most applicable precedent, nor any other
authority cited by the majority suggests that these are necessary con-
ditions for deeming a lookback period to be a limitations period.
Rather than elaborating a formal doctrine of the metaphysics of a lim-
itations period, Young instead assessed the lookback period’s function
— prescribing a period within which certain rights may be enforced
— and its purposes — repose, certainty of parties’ rights, etc. See 535
U.S. at 47.
Following Young, bankruptcy courts have tolled a limitations
period that lacks the majority’s elements and that is closely related to
the limitations period at issue here. Section 727(a)(2)(A) imposes
another condition on obtaining a Chapter 7 discharge, stating that
"The court shall grant the debtor a discharge, unless — the debtor,
with intent to hinder, delay, or defraud a creditor . . . has transferred,
removed, destroyed, mutilated, or concealed . . . property of the
debtor, within one year before the date of the filing of the petition."
This one-year lookback period, which focuses on the debtor’s con-
duct, neither prescribes a period of time within which a claimant must
act nor commences when the claimant has a complete cause of action.
Bankruptcy courts have nevertheless held that § 727(a)(2)(A)’s one-
year lookback period is tolled during the pendency of a debtor’s prior
bankruptcy proceeding. See In re Womble, 299 B.R. 810 (N.D. Tex.
2003), aff’d 108 Fed. Appx. 993 (5th Cir. 2004); In re Seeber, No. 03-
19567, 2005 WL 4677823 (Bankr. E.D. La. July 5, 2005); In re Riley,
No. 01-4452, 2004 WL 2370640 (Bankr. D. Hawaii April 20, 2004).
Similarly, courts have tolled the lookback period in § 109(g) of the
Bankruptcy Code, even though it contains neither of the majority’s
28 TIDEWATER FINANCE v. WILLIAMS
elements and functionally resembles § 787(a)(8). Section 109(g)(2)
prevents one from being a debtor under the Bankruptcy Code within
180 days of having obtained a voluntary dismissal of an earlier filed
case. See 11 U.S.C. § 109(g)(2). Section 109(g)(2) does not, on its
face, prescribe a period of time within which a claimant must act. It
operates with reference to the debtor’s conduct and does not com-
mence when a cause of action of the creditor accrues. Nonetheless,
courts have routinely tolled § 109(g)(2)’s lookback period when a
debtor’s conduct prevented creditors from being able to enforce their
debts within its time frame. See, e.g., In re Dickerson, 209 B.R. 703,
708 (W.D. Tenn. 1997); In re Moody, 336 B.R. 876, 880 (Bankr. S.D.
Ga. 2005); In re Rives, 260 B.R. 470, 471-72 (Bankr. E.D. Mo. 2001);
In re Berts, 99 B.R. 363, 365 (Bankr. N.D. Ohio 1989); In re Wilson,
85 B.R. 72, 72 (Bankr. N.D. Ill. 1988).
Even taking the majority on its own terms, only by a superficial
reading of § 727(a)(8) can one say that it does not provide a specified
period of time within which the creditor must act to preserve certain
remedies. While § 727(a)(8) does not, on its face, address "creditors,"
the obvious and undisputed operation of § 727(a)(8) is to set a time
limit on the nondischargeability of debts, and thereby to set a time
limit on creditors’ rights to enforce the nondischargeability of debts.3
As for its second criterion, the majority notes that § 727(a)(8)’s
lookback period is measured not from the time a creditor has a present
cause of action but from the time a debtor files the first Chapter 7
petition. This distinction has no intrinsic significance, though. A stat-
ute may operate as a limitations period, prescribing a time within
which rights may be enforced, by referencing any measuring point.
And Congress, of course, may choose any point it wishes from which
to measure a limitations period. The majority is troubled that
§ 727(a)(8) could provide varying periods of time to enforce the non-
3
Attempting to show that § 727(a)(8) does not set time limits on a
creditor’s rights, the majority notes the remote possibility that a second
debtor, one entitled to a discharge, could be substituted for the unentitled
debtor. Ante at n.8. As the Young Court noted, however, the fact that a
limitations period affects "only some, and not all legal remedies," means
simply that it is "a more limited statute of limitations, but a statute of
limitations nonetheless." 535 U.S. at 47-48.
TIDEWATER FINANCE v. WILLIAMS 29
dischargeability of various debts, depending on the date the debts
were incurred. While this result differs from the typical statute of lim-
itations, it simply reflects Congress’s choice of a different measuring
point. Indeed, the Supreme Court in Young rejected a similar argu-
ment that §§ 523(a)(1) and 507(a)(8)(A) did not constitute a limita-
tions period because those sections create the potential for situations
in which the IRS would have less than three years to collect a tax
debt. See 535 U.S. at 48-49.
III
Given that § 727(a)(8) is a limitations period under the fully appli-
cable reasoning of Young, it should be tolled "unless tolling would be
‘inconsistent with the text of the relevant statute.’" See Young, 535
U.S. at 49 (quoting United States v. Beggerly, 524 U.S. 38, 48
(1998)). Tolling is appropriate here for the same reason the Supreme
Court found it appropriate in Young — Williams’ Chapter 13 petition
erected an automatic stay under § 362(a), which destroyed or reduced
Tidewater Finance’s time for collecting the debt or enforcing its judg-
ment. See id. at 51. Because Tidewater Finance was so disabled dur-
ing the pendency of the Chapter 13 petition, "this period of disability
tolled the [six-year] lookback period when" Williams filed her Chap-
ter 7 petition. Id. at 50-51.
Far from being inconsistent with § 727(a)(8), tolling the six-year
lookback period during the pendency of a debtor’s Chapter 13 peti-
tions promotes its purpose. Section 727(a)(8) is meant to require a
debtor who has received a "fresh start" under Chapter 7 to spend six
years acting financially responsibly, not avoiding debts through a dis-
charge. See Perry, 383 U.S. at 402. In the same vein, § 727(a)(8) is
meant to create certainty for creditors that the debts they are owed
will not be discharged within that six-year period. Not only does this
certainty benefit creditors, it also benefits debtors. With the protection
afforded by the six-year period of nondischargeability, creditors
become more willing to lend money to debtors with poor credit histo-
ries (due to a previous Chapter 7 discharge) at lower rates than they
would without the protection of § 727(a)(8).
Section 727(a)(8) leaves open, of course, the possibility that a
debtor might resort to Chapter 13 during the six-year period, and so
30 TIDEWATER FINANCE v. WILLIAMS
the six-year period of nondischargeability is not unqualified. But a
debtor who resorts to Chapter 13 and performs her obligations under
the Chapter 13 plan will have made at least some payments to credi-
tors out of her income. And creditors in a Chapter 13 proceeding are
given certain protections, including the right to object to the Chapter
13 plan. See 11 U.S.C. § 1325(b). If a creditor makes such an objec-
tion, the plan may not be confirmed unless the creditor’s claim is paid
in full or the plan directs that the full amount of the debtor’s dispos-
able income in a three-year period be paid to unsecured claims. Id.
Then, upon the debtor’s completion of the Chapter 13 plan and the
entry of a discharge, a new six-year period of nondischargeability
under Chapter 7 begins. See 11 U.S.C. § 727(a)(9). In these ways, the
qualification on § 727(a)(8)’s lookback period posed by a Chapter 13
proceeding affords significant protections to creditors and works in
harmony with the policies of § 727(a)(8). It is the filing and dismiss-
ing of Chapter 13 petitions without taking steps toward making pay-
ments under a plan that eviscerates the § 727(a)(8) period of
nondischargeability. Tolling the six-year period during these aborted
Chapter 13 petitions — regardless of whether they were deliberate
attempts to avoid the six-year period of dischargeability or not — is
therefore both necessary and appropriate to prevent the circumvention
of § 727(a)(8).
Indeed, consider the perverse incentives the Bankruptcy Code
would create if § 727(a)(8)’s period of nondischargeability were not
tolled. One debtor who enters Chapter 13 and completes her Chapter
13 plan as intended by Chapter 13, making payments to creditors and
receiving a discharge, must wait six years to obtain a Chapter 7 dis-
charge. See 11 U.S.C. § 727(a)(9). Yet another debtor who enters
Chapter 13 and then dismisses her case before completing her plan
and receiving a discharge would be able to obtain a Chapter 7 dis-
charge much sooner.
The majority finds tolling inappropriate because it would "allow all
creditors to benefit from equitable tolling — even those that were not
at all affected by the Chapter 13 proceeding that caused the tolling."
Ante at 12. While the doctrine of equitable tolling generally applies
on a case-by-case basis, depending on the equities of the respective
parties, see Harris v. Hutchinson, 209 F.3d 325, 330-31 (4th Cir.
2000), the tolling applied by the Supreme Court in Young was cate-
TIDEWATER FINANCE v. WILLIAMS 31
gorical. See 535 U.S. at 50-51 ("Tolling is in our view appropriate
regardless of petitioners’ intentions when filing back-to-back Chapter
13 and Chapter 7 petitions — whether the Chapter 13 petition was
filed in good faith or solely to run down the lookback period")
(emphasis added). I would apply tolling in the same manner here.
Moreover, no unfairness lies in the fact that a later creditor would
benefit from the full tolling of the period of nondischargeability. It is
the creditor who suffers loss when the debt is discharged, and the
extended period of nondischargeability confers only the unremarkable
right to collect monies lawfully owed. As for the debtor, he obtained
the benefit of the Chapter 13 proceedings, and the extended period of
nondischargeability imposes only the burden of paying monies law-
fully owed.
The majority also concludes that tolling is unwarranted in this case
because "Congress has provided bankruptcy courts with several tools
to remedy any ‘loophole’ of the sort feared by Tidewater." Ante at 12
(citing 11 U.S.C. §§ 105(a), 362(d), 109(g)(2), 349(a); 11 U.S.C.A.
§ 362(c)(3) (West 2007)). In so concluding, the majority effectively
rejects the Supreme Court’s decision in Young. For these same reme-
dies, save the 2005 amendments to the Code which are inapplicable
in this case, were also available in Young. Despite the existence of
these alternative remedies, however, the Young Court deemed the fil-
ing and dismissal of a Chapter 13 petition a "loophole" and acted to
close it.
Additionally, the remedies the majority points to are available only
for cause, essentially a showing that the debtor is acting in bad faith.
See 11 U.S.C. § 105(a) (permitting a bankruptcy court to take action
"to prevent an abuse of process"); id. § 362(d) (directing a court, upon
request of a creditor, to lift a stay "for cause"); id. § 109(g)(2) (pro-
hibiting a person from filing a bankruptcy petition for 180 days after
voluntarily dismissing a petition following a creditor’s request for a
lift of the stay under § 362(d)); id. § 349(a) (permitting the court, "for
cause," to order that dismissal of a petition bars a later discharge of
debts that were dischargeable in the dismissed petition). Young, how-
ever, diagnosed the loophole and conditioned tolling with reference
to the effect that a Chapter 13 petition had on a creditor, not with ref-
erence to the motivation of the debtor: "Tolling is in our view appro-
priate regardless of petitioners’ intentions . . . . In either case, the IRS
32 TIDEWATER FINANCE v. WILLIAMS
was disabled from protecting its claim during the pendency of the
Chapter 13 petition." 535 U.S. at 50-51. Similarly, even if Williams
filed and dismissed each of her Chapter 13 petitions in good faith, the
fact remains that Tidewater Finance’s statutory rights were dimin-
ished, being disabled from enforcing the nondischargeability of Wil-
liams’ debt during the full six-year period provided for by
§ 727(a)(8).
Neither does the fact that Congress amended the Bankruptcy Code
to limit a debtor’s ability to benefit from the stay of § 362(a) upon fil-
ing a Chapter 13 petition preclude tolling of § 727(a)(8). See Bank-
ruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub.
L. 109-8, §§ 302, 303, 119 Stat. 23. The majority’s implicit presump-
tion that Congress’s expression of certain remedies excludes all oth-
ers, see ante n.10, while valid in many statutory schemes, is invalid
as to the Bankruptcy Code. Bankruptcy courts "‘apply the principles
and rules of equity jurisprudence,’" including the doctrine of tolling,
and "Congress must be presumed to draft limitations periods in light
of this background principle." Young, 535 U.S. at 49-50 (quoting Pep-
per v. Litton, 308 U.S. 295, 304 (1939)); see also Holmberg v. Arm-
brecht, 327 U.S. 392, 397 (1946) ("This equitable [tolling] doctrine
is read into every federal statute of limitation"). If anything, Con-
gress’s action to prevent abusive appeals to Chapter 13 proves the
need to apply tolling in this case when only the bankruptcy court’s
equity power could protect Williams’ creditors.
Finally, I would reject also the district court’s holding that, assum-
ing § 727(a)(8) is subject to equitable tolling, it would be inappropri-
ate to toll the lookback period here "because Tidewater Finance
voluntarily chose not to protect its rights during the period between
Williams’ Chapter 7 cases." Under the reasoning of Young, section
727(a)(8)’s lookback period was, as a categorical rule, tolled during
the pendency of Williams’ Chapter 13 petitions. This tolling does not
depend on whether Tidewater Finance acted during the gaps of time
during which Williams was not protected by § 362 stays. Such a rule
would impose an impractical burden on creditors to monitor debtors’
conduct. Since the lookback period was tolled during the pendency of
the Chapter 13 petitions, Tidewater Finance acted within the tolled
six-year period to enforce its right to nondischargeability.
TIDEWATER FINANCE v. WILLIAMS 33
I would accordingly reverse the order of the district court and
remand this case with instructions to enter summary judgment in
favor of Tidewater Finance.