Chapter 20 Bankruptcy: Filing Another Bankruptcy Before The Time Limit Is Up
The time limits above refer to how long a debtor has to wait to discharge debt through another bankruptcy. If you aren’t looking for another debt discharge, but would like to arrange a plan to manage your remaining debts, filing a Chapter 13 bankruptcy immediately after a Chapter 7 discharge might be an option for you.
Filing for Chapter 7 and Chapter 13 in succession is informally called a “Chapter 20 bankruptcy.” The process of filing for Chapter 13 right after the Chapter 7 discharge process can be complicated, and many courts will not allow a double filing before the time limit is up. An attorney can explain the strategy behind double filing and how it may fit into your specific circumstances.
Refiling Bankruptcy After A Dismissal
Dismissal may sound like discharge, but theres a huge difference.
A discharge means youve met all the requirements set by the bankruptcy court. Youre no longer on the hook for the applicable debts and your case is closed.
Dismissal means your case has been closed without your debts being eliminated. Its as if you never filed for bankruptcy. Youre back to Square One and your creditors can start hounding you again.
You can refile after a dismissal, but how soon depends on why your case was dismissed. For instance, you must complete a credit counseling course from an approved agency within 180 days before filing for bankruptcy.
The counselor gives you an idea whether theres a better alternative to bankruptcy, like enrolling in a DMP. If you decide to go ahead with bankruptcy, you must have a certificate showing you completed the counseling course.
Failure to comply will result in the court automatically dismissing your case. But if you scramble and take the course, you would likely be permitted to refile right away.
If it looks like youre trying to game the system, you will have to wait 180 days to refile. The bankruptcy code defines that as willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case.
Examples would be:
- Lying to the court.
- Concealing or transferring property in an attempt to defraud creditors.
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Do The Courts Ever Deny A Chapter 7 Bankruptcy
It can happen. Most individual debtors receive a discharge under Chapter 7.
However, if the courts find that an individual concealed money or other assets, fraudulently transferred assets that should have been used to pay off debts, or otherwise broke the law, the entire bankruptcy case may be denied.
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Dealing With Your Car Loan
If you own a car that you still owe on, youâll have to let the bank and the court know what you want to do with it one one of your bankruptcy forms.
If you want to surrender the car to the lender and discharge the debt, you donât have to do anything other than stop making your payments. The bank will either file request with the bankruptcy court to ask permission to retake the car, or wait until your discharge is granted before picking it up.
If you want to keep the car, you can either reaffirm the loan or redeem the car. If youâre reaffirming your loan, the bank will send you a reaffirmation agreement after your case is filed. You have to complete and sign the agreement and return it to the bank within 45 days from your 341 meeting. The bank files the signed agreement with the court for approval.
To redeem the vehicle you have to file a motion with the court and, once granted, buy the car from the bank for its current value. This gets you out of having to pay the amount left on the loan, but payment has to be made in one lump sum.
Take Bankruptcy Course 2
After filing your bankruptcy forms, you will need to complete a Debtor Education Course from an approved credit counseling agency. It can be completed online or by phone and typically takes at least 2 hours and costs between $10 – $50, unless youâre eligible for a waiver.
The purpose of the course is to educate you on making smart financial decisions going forward but does not provide legal advice about the bankruptcy process. Youâll learn how to prepare a budget and avoid incurring debt with high interest rates.
Youâre not eligible to receive your bankruptcy discharge and obtain a fresh start if you donât complete the course and file your certificate of completion from the credit counseling agency with the court.
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How To File A Bankruptcy With No Money
Filing for bankruptcy almost seems like a contradiction in terms to file, you must pay a filing fee and attorneys fees. But youre filing for bankruptcy in the first place because you dont have enough money to pay your bills. How can you file for bankruptcy with no money? First: schedule a free consultation with a Cleveland bankruptcy lawyer. That way, you can learn how to make your bankruptcy affordable.
Currently, the fee to file for a Chapter 7 bankruptcy is $335, and the fee to file for Chapter 13 bankruptcy is $310. In some cases its also necessary to pay your attorney up front because attorneys fees can become part of a bankruptcy estate and therefore may be discharged in bankruptcy, leaving them little to nothing in the form of payment. However, some fees can be spread out over the time it takes to obtain a bankruptcy.
But you should consider how much money you can save by hiring legal counsel. A skilled bankruptcy attorney knows the ins and outs of consumer bankruptcy law and can handle all administrative aspects of your case. Because your attorney knows what is needed, your case can move quickly through court. Theres no need to wait for years while your debts continue to pile up and your creditors become more demanding. In fact, you could be awarded your discharge, and become debt-free in three or four months.
Bankruptcy Basics: When Should You File For Bankruptcy
Sometimes, there’s no other option than to file for bankruptcy. But before you do, make sure to assess your situation accurately.
Bankruptcy is a scary proposition. The word “bankruptcy” itself sounds so ominous. The media bombards us with nightmare tales of seemingly solid business giants going from bedrock to bankrupt. Gossip columns never tire of dishing on the latest celebrity inches from bankruptcy. You might even fear that you’re a few steps from going under. But, just how can you tell when it’s time to throw in the towel and declare bankruptcy?
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What Happens When You File For Bankruptcy A Second Time
Legally speaking, a person can file for bankruptcies as many times as they want. However, the process becomes more restrictive.
With a second bankruptcy, you will not qualify for an automatic bankruptcy discharge in nine months. Bankruptcy will last from 24-36 months, depending on whether or not you have surplus income.
A trustee will ask the court to hear your application for discharge. The court will decide the terms of your discharge, including how long you will be in bankruptcy and whether you are required to continue making payments into bankruptcy. A creditor can also oppose your bankruptcy discharge which could result in your bankruptcy lasting longer and possibly costing more.
Dealing With Your Trustee
Every bankruptcy trustee determines how they wish to receive the documents from the bankruptcy filers whose cases they oversee. While local bankruptcy bar associations have made some inroads in the past to move this process away from mailing hard copies, many bankruptcy trustees still require just that.
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Dealing With Your Vehicle
One of the forms you will file with the bankruptcy court is called the Statement of Intention. In this form, you tell the court what you plan to do with property that is securing a debt you owe, like real estate or a vehicle.
If you own your vehicle but are still paying on the loan, you have a few options on how to deal with it in Chapter 7 bankruptcy.
Reaffirmation
You can reaffirm the debt, keep your vehicle, and continue making payments. This means the debt will not be discharged and you will continue making monthly payments during and after bankruptcy. If you miss future payments the lender will have the right to repossess the vehicle and possibly try to collect on any deficiency between the balance you owe and the amount they get when selling the vehicle.
If you select this option in your Statement of Intention, your car lender will send you a reaffirmation agreement for you to complete and return. In some bankruptcy cases a reaffirmation hearing will be scheduled.
Surrender
If you choose to surrender your vehicle, then it will be repossessed and the debt will be discharged in your bankruptcy. Filers with high car payments they can’t afford often choose to surrender their car to get out of the debt.
Redemption
Can A Bankruptcy Discharge Be Denied
A judge can deny a bankruptcy discharge for several reasons, such as:
- Failing to maintain financial records adequately
- Committing a crime related to the bankruptcy case
- Failing to follow an order from the bankruptcy court
- Fraudulently transferring, hiding or destroying property that is supposed to be part of the bankruptcy case
- Failing to complete a court-ordered financial management course
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What Bankruptcy Can Do
Bankruptcy allows people struggling with debt to wipe out certain obligations and get a fresh start. The two primary bankruptcy types filedChapter 7 and Chapter 13 bankruptcyeach offer different benefits and, in some cases, treat debt and property differently, too. You’ll choose the chapter that’s right for you depending on your income, property, and goals.
Here are some of the things you can expect regardless of whether you file for Chapter 7 or 13.
Bankruptcy Discharge And Your Credit
Both a bankruptcy filing and bankruptcy discharge can hurt your credit. Thats because the bankruptcy filing and discharged debts can stay on your credit report for seven or 10 years. However, a debt showing up on your credit report as discharged may be less harmful than an unpaid debt that lingers indefinitely on your credit report.
A Chapter 7 bankruptcy falls off your credit report after 10 years. For Chapter 13 bankruptcy, its seven years.
Keep in mind that a discharged debt might not appear on your credit report as being discharged. If you notice a discharged debt is incorrectly categorized on a credit report, notify the credit bureau that produced the report and ask that the error be corrected. Each year, you can obtain a free credit report from the three major credit bureaus through annualcreditreport.com.
Fortunately, if you handle your credit responsibly after completing the bankruptcy process, the impact of the bankruptcy on your credit score will fade over time. You may even see improvement in your credit score within 12 months of a bankruptcy cases being wrapped up.
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What You Can Expect From Your Initial Free Consultation With A Trustee
To learn more about how filing for bankruptcy would affect you, and whether there are practical alternatives, we encourage you to book a free personal consultation with a local Licensed Insolvency Trustee.
The Trustee will discuss your personal situation with you, answer your questions, and advise you on whether bankruptcy is a good fit for your situation, or if a different insolvency solution an alternative to bankruptcy might be more suitable for you.
The consultation is confidential, and also risk-free as you have no obligation to continue to work with the same Trustee in the future, nor can the Trustee make any decisions on your behalf. You will leave the Trustees office with a lightened emotional load, knowing you have received trusted professional advice.
Making Changes To Your Bankruptcy Forms
Your bankruptcy forms are signed under penalty of perjury. When you file, you’re declaring that the information in your bankruptcy forms is true and correct to the best of your knowledge. If you accidently leave something out or make a mistake, you’ll need to make changes to your forms.
This is done by filing an amendment with the court. You might need to file an amendment because you forgot to list an asset or a , you need to add information that was originally missed, you change your mind about signing a reaffirmation agreement, or the trustee requests that forms be amended.
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Should I File Chapter 7 Or Chapter 13 Bankruptcy
To be clear, the question is not just which type of bankruptcy is appropriate to your situation. Its whether bankruptcy is the right move for you period.
Its a complicated process, and you should consider speaking to a to determine if theres another way to deal with your debt. Nonprofit consumer credit counseling organizations receive more favorable terms with creditors, and its possible that a debt management plan, debt consolidation loan or debt settlement could be a better solution. You can review your options for free by speaking to a credit counselor.
If bankruptcy is your best course of action, InCharge offers bankruptcy court-approved bankruptcy education courses through PersonalFinanceEducation.com.
Attend A Meeting Of Creditors
Although it may sound intimidating, a meeting of creditors is usually only a meeting with the bankruptcy trustee in a conference room. Although creditors are entitled to attend, they usually dont. The bankruptcy trustee will review the accuracy of the information filed with the court. Its important to review your bankruptcy petition with your attorney before the meeting to ensure no required information was omitted and that there are no discrepancies. If you notice that anything is incorrect at any time, make sure to bring it to the attention of your attorney or the bankruptcy trustee.
Bring a state ID or passport for identification, your Social Security card or other proof of your SSN, such as a W-2 form, and any documents relevant to any financial change you may have had since filing your petition. Your bankruptcy lawyer from Leinart Law Firm will bring the bankruptcy paperwork and inform you of anything else you may need to bring.
In most cases, a meeting of creditors takes 10 minutes or less. The trustee will swear you in, ask some common questions and inquire about any matters that may need more explanation. Our bankruptcy attorneys will prepare you for this meeting and let you know what to expect.
Depending on the type of bankruptcy you file, typical questions may include:
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A Quick History Of Bankruptcy
The term bankruptcy probably came from the Italian phrase banca rottawhich literally means broken benchbecause in medieval days, if a merchant couldnt pay their creditors, they could come break the merchants market stall .1
What about bankruptcy in America, specifically? Well, several different bankruptcy acts popped up during times of economic crisis before the Bankruptcy Act of 1898. This one said bankruptcy didnt require the creditors approval and stuck around until the Bankruptcy Reform Act of 1978which set the laws we follow today.
Now when you file for bankruptcy, no ones coming to smash your bench , but its still a painful experience.
Who Qualifies For Chapter 13 Bankruptcy
The requirements for Chapter 13 bankruptcy differ from the requirements for Chapter 7 bankruptcy. Here are some of them.
- You must have sufficient income to make the monthly debt payments outlined in your bankruptcy plan.
- Your unsecured debts must be less than $419,275, and your secured debts must be less than $1,257,850. These dollar amounts are in effect until April 2022. Debt limits change every three years.
- If you attempted to file for Chapter 7 or 13 bankruptcy but your case was tossed out, you must wait 181 days or more before refiling.
- You must provide proof that you filed federal and state income tax returns for the past four years.
- You typically must finish an individual or group credit counseling course offered by an approved credit counseling agency within 180 days before you file for bankruptcy.
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When Should I Declare Bankruptcy
When asking yourself Should I file for bankruptcy? think hard about whether you could realistically pay off your debts in less than five years. If the answer is no, it might be time to declare bankruptcy.
The thinking behind this is that the bankruptcy code was set up to give people a second chance, not to punish them forever. If some combination of bad luck and bad choices has devastated you financially, and you dont see that changing in the next five years, bankruptcy is your way out.
Even if you dont qualify for bankruptcy, there is still hope for debt relief. Possible alternatives include a debt management program, a debt consolidation loan or debt settlement. Each one of those choices typically require 3-5 years to reach a resolution, and none of them guarantees all your debts will be settled when you finish.
The decision shouldnt come down to how long Chapter 7 bankruptcy takes the process itself is only 4-6 months. The thing you have to remember is that bankruptcy carries significant long-term penalties. It is stuck on your credit report for 7-10 years, which can make getting loans in the future very difficult.
The flip side of that is there is a great mental and emotional lift when all your debts are eliminated, and youre given a fresh start.
