Declaring bankruptcy under Chapter 13 or Chapter 7 can sometimes be the best way to move forward after severe financial hardship. Individuals, sole proprietorships, and partnerships often opt to file a Chapter 7 bankruptcy claim to discharge certain debts and start over. But if you have experienced financial hardship more than once, can you file another type of bankruptcy claim? The answer is yes. It is possible to file for Chapter 13 bankruptcy after previously filing for Chapter 7 bankruptcy. However, there are specific rules and timeframes you need to be aware of before filing for Chapter 13 bankruptcy after Chapter 7. In this post, the Pakpour Banks LLP team will explain the legalities, waiting period, and consequences of filing Chapter 13 bankruptcy after you have already filed Chapter 7. Contact us today to speak to a California bankruptcy lawyer.
Chapter 13 After Chapter 7: What to Know About Timing and Discharge
Filing chapter 13 after chapter 7 is often possible, but a recent discharge can limit what the new case can do for you. Keep these points in mind.
- The waiting periods limit discharge, not filing: Federal law generally does not bar you from filing a new case after chapter 7, but timing rules can affect what the new case accomplishes.
- A four-year rule affects discharge: Under 11 U.S.C. § 1328(f)(1), a chapter 13 discharge is generally unavailable if your earlier chapter 7 case was filed within four years of the new petition and ended in a discharge.
- Chapter 13 needs regular income: Chapter 13 is for individuals with regular income and uses a repayment plan, which typically lasts three to five years.
- Your goals decide whether it fits: Even without a discharge, a repayment plan may help you catch up on missed mortgage payments or pay certain debts over time, so have an attorney review your situation first.
Eligibility for Filing Chapter 13 Bankruptcy After Chapter 7
In California, as in other parts of the United States, there are specific rules and timelines for filing Chapter 13 bankruptcy after previously filing Chapter 7 bankruptcy. All jurisdictions use federal bankruptcy law, keeping the process consistent nationwide. We will cover each of the critical sections of bankruptcy law that may apply if you are considering filing Chapter 13 bankruptcy when you have previously filed for Chapter 7 protection.
Time Between Filings
There is a waiting period that you must observe before filing your second bankruptcy claim. According to the U.S. Bankruptcy Code, you must wait at least four years from the date of filing Chapter 7 to file for Chapter 13. Alternatively, if you previously filed for Chapter 13 and want to file for Chapter 7, you generally need to wait six years before filing another bankruptcy claim.
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Money problems after a bankruptcy can feel discouraging, and it is natural to wonder what is still possible. The attorneys at Pakpour Banks LLP will listen to your situation, explain your options in plain language, and help you decide what to do next.
Schedule a Free ConsultationEligibility
To be eligible for Chapter 13 bankruptcy, you must meet specific criteria. One of the most critical items to consider before filing a Chapter 13 bankruptcy is that you must have a regular income to fund a repayment plan. Depending upon the circumstances of your past financial hardship, your previous bankruptcy may affect your ability to qualify for Chapter 13. Be sure to consult with a qualified bankruptcy attorney to assess your eligibility.
Consequences of Filing a Second Bankruptcy Claim
Filing a Chapter 13 bankruptcy after previously filing a Chapter 7 bankruptcy comes with both benefits and drawbacks. We will explain some more about what you can expect if you choose to make a second bankruptcy filing below.
Debt Discharge
Filing Chapter 13 after Chapter 7 can be beneficial if you have debts not discharged in your Chapter 7 case. These items often include certain tax debts or domestic support obligations like alimony and child support. Chapter 13 can help you address these non-dischargeable debts. Speak with a member of the Pakpour Banks team to discuss whether a Chapter 13 bankruptcy may suit your circumstances.
Repayment Plan
In Chapter 13 bankruptcy, you will create a repayment plan to pay off a portion of your debts over three to five years. This is different from Chapter 7, where most of your debts are discharged without repayment.
How to File Chapter 13 After Chapter 7
If you want to file a second bankruptcy claim, the process generally involves the following steps.
Consult an Attorney
First, consult with a bankruptcy attorney who can evaluate your specific financial situation and advise you on the best course of action. While a Chapter 13 bankruptcy might make sense for some, a skilled attorney can assess your situation and advise whether you may be eligible for less restrictive means of paying your debts. They may be able to help you achieve payment plans or settlements directly with creditors, bypassing the need for a second bankruptcy filing.
Gather Financial Information
Prepare a list of your assets, debts, income, and expenses. This information will be necessary for filing the Chapter 13 petition. By having it on hand, you can save yourself time and hassle.
Attend Credit Counseling
Before filing for Chapter 13 bankruptcy, you must complete credit counseling from an approved agency. Your attorney can help you find a suitable agency.
File a Chapter 13 Petition
Your attorney will help you prepare and file the necessary paperwork for Chapter 13 bankruptcy. This includes the petition, schedules, and a proposed repayment plan.
Meeting of Creditors
You will be required to attend a meeting of creditors, where your creditors can ask questions about your financial situation and proposed plan. Sometimes, debtors do not know how to handle these meetings and worry they will lose their composure or not know what to say. A bankruptcy attorney can help you navigate creditor meetings and act as your advocate throughout the process.
Confirmation Hearing
After the meeting of creditors, a confirmation hearing will be scheduled where the bankruptcy court will review and approve your repayment plan. Once your repayment plan is approved, you will need to make regular payments to the Chapter 13 trustee for the duration of the plan, which typically lasts three to five years. Upon successfully completing the repayment plan, you may receive a discharge of any remaining eligible debts.
Get Good Advice
Remember that bankruptcy laws can be complex and vary by jurisdiction, so it is crucial to seek professional legal advice before proceeding with any bankruptcy filing, especially if you have previously filed for bankruptcy. An attorney can help you handle the process and ensure that you properly meet all legal requirements.
Second Bankruptcy Filings: Your Questions, Answered
Yes, in most cases. The waiting periods in federal law limit when you can receive a discharge, not whether you can file a new case. Filing chapter 13 after chapter 7 may still be allowed, but a recent discharge can affect what the new case accomplishes, so review your timeline with a bankruptcy attorney.
Four years. Under 11 U.S.C. § 1328(f)(1), you generally cannot receive a chapter 13 discharge if your chapter 7 case was filed within four years of the new petition and ended in a discharge. The period runs from the earlier filing date, not from the date of the discharge.
No. The four-year period limits discharge, not filing. You may be able to file sooner, but the court may not grant a discharge in the new case. Some people file anyway for other reasons, such as using a repayment plan to catch up on missed payments, so talk through the tradeoffs first.
Chapter 20 is an informal term for filing chapter 7 and then chapter 13. Debtors sometimes use it to eliminate eligible unsecured debts in chapter 7 and then use a chapter 13 plan to handle other obligations, such as mortgage arrears. Whether it fits depends on timing, your income, and your goals.
Chapter 13 is available to individuals, including some self-employed people, who have regular income and debts within the limits set by law. You must also complete credit counseling from an approved provider before filing. A prior bankruptcy alone generally does not make you ineligible, though other rules can apply.
Most chapter 13 plans last three to five years. You make monthly payments based on your income and expenses, and a judge must approve the plan at a confirmation hearing. The length of your plan can depend on your income level and the debts it includes.
Yes, it is a good idea. The timing rules, discharge limits, and plan requirements can change what a second filing accomplishes, and mistakes can be costly. Pakpour Banks LLP can review your prior case, your current finances, and your goals, and then outline your options.
Speak to a California Bankruptcy Lawyer Today
Your financial health matters. When facing extreme financial hardship, trust Pakpour Banks LLP to help see you through a bankruptcy hearing and get you back on track. With an experienced bankruptcy law attorney from Pakpour Banks LLP negotiating on your behalf, you may be surprised by the options available to you to discharge your debts and start over. Even when it seems like there is no end in sight to the financial difficulties, our knowledgeable legal team can help you obtain the peace of mind you deserve. Contact us today to learn more.
Brian enters the family law profession with a refreshing approach to these proceedings: heal families; don’t destroy them. In some cases, this means the family is going to look different than it did before. In other cases, this means a new family is created where there was none before. Either way, individuals should leave family court knowing their voices were heard, and with healthy attitudes about themselves and those they love.