In a recent article, we discussed the information you need to know if you are considering filing for bankruptcy more than once. There are both pros and cons to multiple filings, and it is recommended that anyone thinking about this solution speaks to an experienced bankruptcy attorney. We also discussed a little-known term in bankruptcy – “Chapter 20.” In this article, we’ll review the double-filing process, its implications, and the meaning of Chapter 20 for those who choose this option. (Read Part One of this series here.)
The Impact on Existing Payment Plans
It is sometimes possible to utilize a bankruptcy discharge from a second bankruptcy filing to fulfill the terms of the first bankruptcy. In other words, an individual can file for Chapter 7 bankruptcy, liquidate assets and discharge the debt if they cannot meet their existing Chapter 13 payment plan.
Conversely, a Chapter 13 filing can be used to create a payment plan covering those debts left over after a Chapter 7 bankruptcy.
This type of filing is known as Chapter 20 bankruptcy, but this is merely a nickname – the “chapter” is not part of the U.S. Bankruptcy Code. It got its name by simply adding 13 and 7.
It is important to point out that the court or trustee may object to this approach, and some courts may not allow it at all. Be sure to check with an experienced bankruptcy attorney.
Here’s what you need to know.
Chapter 20 Filing – Pros
- Chapter 20 filing provides an opportunity to eliminate more debt than Chapter 7 or Chapter 13 alone.
- Individuals can get rid of unsecured debt under Chapter 7, lowering their debt below Chapter 13 limits. They can then use Chapter 13 to structure a three to five-year repayment plan to pay off the remainder of the secured debt.
- This payment plan can assist in catching up on past-due payments such as vehicle loans, mortgages, or medical expenses.
Chapter 20 Filing – Cons
- Double filing requires a four-year wait period between Chapter 7 and Chapter 13 filings. The process prolongs the time and effort needed to put the financial problems in the past.
- Chapter 20 filing can be challenging as the individual must convince the court that they are acting in good faith by filing under Chapter 13 after concluding their Chapter 7 case.
- The Chapter 20 approach will not allow the discharge of certain debts such as taxes, student loans, child support, and alimony.
Don’t Attempt Without an Attorney
Filing for bankruptcy can be a complicated legal process, and it is highly recommended that you seek out the assistance of an experienced bankruptcy attorney. While you are permitted by law to represent yourself, hiring a bankruptcy lawyer is likely to result in a more favorable outcome. This is because of the many legal regulations, stipulations, and deadlines involved in a bankruptcy case. If an individual misunderstands, files incorrect paperwork, or misses an important date, the entire bankruptcy can be dismissed from the court.
Richard V. Ellis is an experienced bankruptcy attorney with comprehensive knowledge of the Florida bankruptcy code. He understands that financial pressure can be overwhelming and can help you to resolve your problems and get back to living your life without anxiety.
If you are considering bankruptcy, call the Sarasota law offices of Richard V. Ellis today.
