I’ve been a bankruptcy lawyer just one month shy of 11 years. Some of you may think the title question is awful or must mean the person who asks it is just awful at managing their finances. But I’ve been seeing many repeat clients recently. These are really good, hardworking, honest people who come in feeling terrible that they have to consider filing again. Many think they are not eligible to refile but leave comforted that there are actually available options even if one has filed a bankruptcy case in the recent past.
So here’s a quick primer –
If you have filed a Chapter 7 case and received a discharge, you are not eligible to file another Chapter 7 for 8 years from the date of the previous Chapter 7 filing. It’s filing date to filing date. Not discharge date to the next filing date.
If you have filed a Chapter 13 case and received a discharge, you are not eligible to file a Chapter 7 case for 6 years from the date of the previous Chapter 13 filing.
If you have filed a Chapter 7 case and received a discharge, if you file a Chapter 13 case within 4 years of the Chapter 7 filing, then you must pay all your creditors, and cannot receive a discharge of any debts.
BUT, if you file a Chapter 13 case 4 years from the Chapter 7 case, you may propose a Chapter 13 plan that pays nothing to your unsecured creditors (credit cards, medical bill; bills that are not associated with collateral) if you otherwise do not have too much property or too much income.
And the above is a powerful option. Many people who need a Chapter 7 filing after they have filed one recently, and are ineligible, can actually benefit from a Chapter 13 filing. It may not offer them the total “wipe out” of debts but it can help by reducing the interest rates of debts and could even provide total wipe out of unsecured debts if filed after 4 years from the Chapter 7 filing.
So don’t assume you’re out of options if you have had a recent bankruptcy filing and find yourself in a bind because of circumstances beyond your control. Call us and let’s figure out if a Chapter 13 bankruptcy filing may offer you some relief.
Oh, and for those who wonder why anyone would have to file again? Well, consider the economy the past ten years. And wages. And the mortgage crisis. And the very slow growth in terms of the housing market (not) rebounding quickly or wages increasing at a similar pace with inflation. Don’t feel bad – call us so we can help.
By Karen Maxcy, W M Law Attorney