“I know I want these calls to stop. I really need to get this done. Maybe I’ll put it off until I have more debt to get rid of.” Does this look like a conversation in your head? Many people think about bankruptcy as their “get out jail free” card and are waiting for the right time to use it. What they might not know is that protection under the bankruptcy laws may be available more often than they realize. When does a person’s financial situation become ripe for a bankruptcy petition? If they are about to lose their home, car or other valued items, it may be time to go see a bankruptcy lawyer.
If you think about it, the periodic opportunity to discharge debts you cannot pay can be a unique experience.
Decision makers in businesses who use bankruptcy laws as strategic financial planning guidelines are well aware that the status alone of having an active petition for bankruptcy on file can keep the wolves away from time to time. This doesn’t mean being a serial filer and petition withdrawer is the best plan, but knowing the laws are there when needed helps fiduciary decision makers.
Successive Chapter 7 and 13 cases may be filed but the time frames are different. In Chapter 7, the “full discharge,” you may receive a second discharge so long as it is not within eight years of the date the first case was filed. For Chapter 13, “reorganization,” you may receive a second discharge so long as it is not within two years of the date the first case was filed. Another interesting wrinkle folds into the timing plan and the Chapter under which you first sought protection controls the timing for subsequent filings. Therefore, if you first filed a Chapter 13, you could file a subsequent Chapter 7 within six years, and conversely, if you started with Chapter 7, four years need to pass before you can file the Chapter 13 petition. Of course, there are exceptions to general rules.
So, should/would/could I file another petition even though I won’t be eligible for a discharge? Maybe.
There are several circumstances in which it makes sense to file a Chapter 13 case, for example, right after receiving a Chapter 7 discharge, commonly known as a “Chapter 20.” An experienced bankruptcy attorney can best help determine if there is a reason and opportunity for a client to seek “20” protection.[i] “You need the extra time but have too much debt. If you need the extra time to cure an arrearage on a mortgage or car loan but your overall debt exceeds the debt limits under Chapter 13, filing a Chapter 7 first might help. By filing the Chapter 7, you can reduce your overall debt. Then, with your debt load reduced, you may be able to qualify for Chapter 13. Although you won’t be able to get a second discharge in the Chapter 13, the second bankruptcy filing will give you extra time to cure the arrearage on your mortgage or car loan or to pay down debts that were not eligible for discharge under the Chapter 7, such as tax debt.”
For whatever need you may have, knowing a smart bankruptcy attorney who knows the interplay of the rules for timing of filings and discharge eligibility is a best bet. Joseph Wrobel has been practicing bankruptcy law long enough to teach histories of the law and can direct you to the best course of action in resolving complex financial issues and a fresh start for you or your business.
To learn more about bankruptcy and your options, contact an attorney at Joseph Wrobel, Ltd. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel, Ltd. on Twitter. If you need legal assistance, please call Joseph Wrobel, Ltd. by dialing (312) 781-0996 to talk to an attorney.
[i] NOLO website: What is Chapter 20 Bankruptcy?