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.
What Is Chapter 7 Bankruptcy
Chapter 7 is known as the liquidation bankruptcy because it discharges most of your unsecured debt. That includes , medical bills and personal loans.
Its the quickest, simplest and most common type of bankruptcy. According to the American Bankruptcy Institute , 63% of the 774,940 bankruptcy cases filed in 2019, were Chapter 7.
An even more encouraging bankruptcy statistic: 94.3% of Chapter 7 filings had their debts discharged, meaning forgiven.
You must pass a means test to qualify for Chapter 7 filing. The bankruptcy means test examines financial records, including income, expenses, secured and unsecured debt to determine if your disposable income is below the median income for your state. The means test income level varies from state to state.
You might be forced to sell any non-exempt assets, though several online sites claim that 96% of Chapter 7 filings are no asset cases, meaning there is not enough equity or value in the property for a trustee to sell it and pay off creditors.
Generally, the Chapter 7 process can be completed in four to six months.
Consider The Pros Of Double Filing
Getting a Chapter 7 discharge and immediately filing for Chapter 13 will give you more time to pay back debts that cannot be discharged, such as child support or spousal support.
Similarly, if you just need more time to pay off your debt, you can consider filing for a second Chapter 13 early. This will not discharge any debt but adds another five years to your bankruptcy payment plan. This will buy you more time instead of having automatic wage garnishment applied to your paychecks.
If you did not receive a discharge during the first filing, you might get one in the second bankruptcy.
If you are considering double filing, you need to work with a bankruptcy lawyer to get it right. There are many nuances that could lead a court to declare that you have filed again in bad faith.
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Getting Professional Legal Advice
$0 to $2,500
As mentioned in the previous section, at some point in the bankruptcy process, you may decide to hire someone to help you. If you qualify for free legal aid and help is available near you, this could cost you nothing. Or, if you just want help with the mechanical task of completing the forms and dont need legal advice, you can hire a bankruptcy petition preparer .
But if you have questions about how to interpret a particular form, or want an opinion about how bankruptcy law, state exemption laws, or federal tax laws apply to your particular situation, you may want to hire a bankruptcy lawyer, at least for an initial consultation.
How Trustees Can Increase The Size Of The Bankruptcy Estate
The whole point of bankruptcy is to make sure that everyone gets their rightful share of the “pie” when there’s not enough pie to go around. Or to put it an more legal way: to provide an orderly distribution of available assets to all creditors, based on the priority outlined in federal bankruptcy law.
The job of the trustee is to make that “pie” as large as legally possible.
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Your Bankruptcy Discharge Can Be Revoked
Additionally, bankruptcy courts may revoke a discharge under certain circumstances. For example, a trustee, creditor, or the U.S. trustee may request that the court revoke the debtors discharge in a Chapter 7 case based on allegations that the debtor obtained the discharge fraudulently, like if you concealed property or failed to keep adequate records.
Typically, a request to revoke the debtors discharge must be filed within one year of the discharge or, in some cases, before the date that the case is closed. The court will decide whether such allegations are true and, if so, whether to revoke the discharge.
Time Limits Apply To Discharges Not Bankruptcy Filings
Bankruptcy law doesn’t set a minimum period that you must wait before filing for bankruptcy a second time. However, there’s a catch. If you file too soon after wiping out debt in a previous case, you won’t be eligible for another debt discharge .
Although there are times that it makes sense to file for bankruptcy even though you won’t receive a discharge, these situations are rare . Because a bankruptcy filed too soon will end up being a waste of time and money in most cases, it’s essential to know how to time your bankruptcy filing.
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Frequency Of Bankruptcy Discharges For Chapter 7 11 12 13
But what happens when you need to file bankruptcy again?
Once you have already filed for Chapter 7 bankruptcy, the bankruptcy court will deny a discharge in a subsequent Chapter 7 case if you already received a discharge in your previous Chapter 7 or Chapter 11 case if it was filed within the last eight years. In simple terms, you can obtain a Chapter 7 bankruptcy discharge every eight years. The eight-year time period starts to run from the date your previous case was filed.
The bankruptcy court will also deny a Chapter 7 discharge if the debtor has previously received a discharge in a Chapter 12 or Chapter 13 case filed within the last six years unless the debtor meets fairly strict requirements regarding the amount of debt she paid back in her Chapter 13 case. Similarly, a debtor is ineligible for a second discharge under Chapter 13 if he or she received a prior discharge in a Chapter 7, 11, or 12 case filed within four years of the current case or in a Chapter 13 case filed within two years of the current case.
Q: What Information Will I Need To Give To The Attorney
A: You will first need to gather up all of your outstanding debts monthly billing statements. If there is any debt that you know you owe, but you just cannot find a monthly billing statement for it , then you will need to write up a list for those additional debts. The list will need to show the creditors name, mailing address, account number , and the amount owed. The exact dollar amount is not that important, it is the name and address that is critical. Next you will need to gather up your pay stubs for the prior 6 months. You must have everyone of these. If some are missing ask your payroll officer for a reprint of the missing stubs. Lastly you will need to have a copy of your last two years of Federal Tax Returns.
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What Are Bankruptcy Discharge Time Limits
The time limit between bankruptcies depends on the type of bankruptcy you filed last. You should start counting the time since the date you filed the case with the court.
How often can you file for Chapter 7 bankruptcy?
According to the Bankruptcy Code, there must be a 7 year period before you can declare bankruptcy Chapter 7. Its the longest time required between cases. However, Chapter 7 provides the quickest form of debt discharge.
Can you file Chapter 13 bankruptcy after Chapter 7 bankruptcy?
Yes, you can file for Chapter 13 bankruptcy within 4 years after receiving a Chapter 7 discharge, but it wont relieve your debts. You can use it to pay off tax debts or other types of debt that survived the prior case.
Chapter 7 bankruptcy in 6 years after Chapter 7 bankruptcy
If you managed to repay the debt within the Chapter 13 repayment plan, you can declare Chapter 7 bankruptcy about 1 year after receiving a Chapter 13 discharge.
How often can you file for Chapter 13 bankruptcy?
There must be at least 2 year break between Chapter 13 bankruptcy discharges. However, typically, the minimum term of a Chapter 13 repayment plan is 3 years.
Nebraska Residents Who Consult With Our Attorneys Learn That Bankruptcy Is Affordable And Good For Their Credit
Nebraskans may be in financial distress but do not call a lawyer. They tell themselves I cant afford to hire a lawyer. The truth is that bankruptcy is affordable and typically results in restoring your credit rating much sooner than if you dont file.
The reasons for affordability are simple. In a chapter 7 bankruptcy you can eliminate many of your monthly payments. In a chapter 13 bankruptcy your monthly payments will typically be $100-$150 per month, which is much lower than what people typically pay on their debt. The reduction or elimination of monthly payments makes the process affordable. If you are making high monthly payments then one option is to skip those payments and use the funds to start your bankruptcy. Also, the longer you wait to file then the longer you are subjected to situations such as wage garnishment, liability for unpaid taxes, and responsibility for unpaid mortgages. Contact our Omaha bankruptcy attorneys today.
Bankruptcy can also restore your credit more quickly than if you dont file. After your debts have been discharged then you will have a fresh start and your debt-to-income level will be ideal. Also, the bankruptcy will be removed from your credit reports after ten years, while consistently making your debt payments late because you have not filed for bankruptcy, can harm your credit for much longer. The sooner you file then the sooner you achieve a financial reboot.
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What Are The Federal Bankruptcy Exemptions
Although most states require bankruptcy filers to use state-specific bankruptcy exemptions, Nebraska law allows you to use either state or federal exemptions. However, you must choose one or the other you cannot use parts of both. If you choose to use federal exemptions when you file for bankruptcy, then you may keep:
- $23,675 of equity in your primary home. This is the homestead exemption you can use it to protect residential real estate as long as you live there. However, this does not extend to investments in rental properties.
- Your vehicle up to a value of $3,775.
- Jewelry valued up to $1,600.
- Household items worth up to a total of $12,625, as long as no single item is worth more than $600. This includes furniture, appliances, clothes, animals, books, etc.
- Tools for your work, including books, valued up to $2,375.
- A total of $12,625 in loan value, dividends or life insurance policy interest.
- All health aids.
When Can You Benefit From A Second Bankruptcy Filing
When you need no discharge but want to prolong the time to manage to repay the debt, you can file for Chapter 13 bankruptcy and get enough time to work out a reasonable repayment plan. The same thing concerns filing a Chapter 13 case immediately after getting a Chapter 7 discharge. You receive time to pay off debts that are not dischargeable.
Just make sure to consult an attorney before beginning this process.
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How To File For Chapter 7 Bankruptcy
If bankruptcy sounds like it may be the right solution for you, learn more about the process in How to File for Bankruptcy in Lincoln, Nebraska.
Or you may want to jump right into a more in-depth resource like Nolos book, How to File for Chapter 7 Bankruptcy, which walks you through the process step-by-step, including how to fill out and file your bankruptcy forms.
Chapter 7 Bankruptcy Nebraska
As Chapter 7 is the most common consumer bankruptcy filing, we will cover this bankruptcy first. In order to file Chapter 7 bankruptcy, you have to go through means-testing. The means test was added to the Bankruptcy Code in 2005 to prevent bankruptcy fraud. The income requirement for Nebraska helps ensure that a person with a sufficient income to pay back some of the debts may file a Chapter 13 instead of Chapter 7.
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What If You Didn’t Receive A Discharge In The First Case
In most situations, you can file again and receive a discharge in the second bankruptcy if you didn’t receive one in the first matter. But that’s not always the case. Also, you lose the full benefits of the automatic staythe order that stops creditors from collectingwhen you file multiple bankruptcies in quick succession.
The court dismissed the first case
- Unless the court orders otherwise, you can file again. A 180-day waiting period may apply if you failed to obey a court order or appear in the case, or you voluntarily dismissed the case after a creditor filed a motion for relief from the bankruptcy stay.
The court denied your discharge
- You might be able to file again, but you probably won’t be entitled to a discharge of the debts listed in your first case. This is another unusual circumstance wherein you would be wise to seek the advice of an experienced bankruptcy lawyer.
Could Chater 11 Apply To An Individual
Although Chapter 11 is the most common type of bankruptcy filed by businesses, it can be used by individuals as well. An individual may file Chapter 11 if a high level of disposable income places them outside of the debt limit for a Chapter 13 or Chapter 7. A high-profile or high net worth individual is more likely to file a Chapter 11 bankruptcy than would someone in a typical financial situation.
More commonly, Chapter 11 allows a business to remain active while paying creditors over a specified period of time.
To do this, the business will file a voluntary or involuntary petition with the bankruptcy courtvoluntary petitions are filed by the debtor, whereas involuntary petitions are filed by the creditors, but not until after certain criteria have been met. Generally speaking, the debtor will then have about four months to establish a reorganization plan for going forward. If it sees fit, however, the court may extend this period to up to 18 months.
The purpose of the reorganization plan is to prioritize certain debts and creditors by placing them into different classes. Unsecured claims, for example, would be in their own class. If you believe that filing Chapter 11 bankruptcy may be the best option for your business, it is in your best interest to speak with an attorney who specializes in bankruptcy law.
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Sales Debt And Bankruptcy
You may have experienced a financial hardship and now are deciding whether to file bankruptcy in Nebraska. We are sorry to hear that you are needing to read this article right now, but our goal is to explain how everything works, so you can decide whether bankruptcy is right for you. Heres what well cover:
Receiving Another Bankruptcy Discharge
You’ll qualify for another discharge if you meet the waiting period rules. Here’s how it works.
Chapter 7 to Chapter 7. If you received a Chapter 7 discharge previously, eight years must elapse between the old and new filing dates.
Chapter 13 to Chapter 13. Two years must elapse between the two filing dates to receive a discharge in Chapter 13. Because a Chapter 13 repayment plan usually takes three to five years to complete, you’ll likely be eligible for a second discharge after finishing the first case.
Chapter 7 to Chapter 13. Four years must elapse between the Chapter 7 and Chapter 13 filing dates. Chapter 13 has its benefits even if you don’t receive a discharge, however. For instance, you can pay off priority debts, such as newly-incurred taxes or domestic support arrearages. Or, you can catch up on missed mortgage or vehicle loan payments and keep a house or car. Filing for Chapter 13 immediately after receiving a Chapter 7 discharge is commonly referred to as a Chapter 20 bankruptcy.
Chapter 13 to Chapter 7. If you received a Chapter 13 discharge and you’d like to receive a Chapter 7 discharge, you’ll have to wait six years between filing dates. But there is an exception to this rule. The six-year rule won’t apply if, in the previous Chapter 13, you paid back:
- all of your unsecured debts, or
- at least 70% of your unsecured debts in a plan proposed in good faith and implemented through your best efforts.
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What Is A 341 Hearing
Everyone who files for bankruptcy must attend a 341 hearing, which is also called a “creditors meeting.” The meeting is conducted by the bankruptcy trustee assigned to your case. The trustee will put you under oath and may ask you questions about the information you’ve provided on your bankruptcy forms. Creditors may also show up at the hearing to ask you questions, but it’s not common for them to do so.
Bankruptcy law also requires the trustee to ask you questions to be sure you understand how bankruptcy works and the potential consequences of filing bankruptcy, such as the effect on your credit record.
For most bankruptcy filers, this will be your only trip to the courthouse . Most court websites post schedules of 341 hearings, and when you file, you will be notified of your hearing date. When you show up for your hearing, you will find that many other people have hearings set for the same day. You will sit and wait for your name to be called–usually in a room somewhere in the courthouse or federal building, but probably not in a courtroom.