Why Should I file for Bankruptcy again if I am not Eligible for a Discharge?

Changes to the bankruptcy code have resulted in the implementation of time limits between bankruptcy filings and when a debtor is eligible to receive a discharge.  These time limits depend on the type of bankruptcy the debtor filed previously and the type of bankruptcy the debtor is attempting now.  The time limits are determined by looking at when the first case was filed, not at when the first case received a discharge.  If the debtor has filed a previous bankruptcy case, the waiting period starts from the time the previous case was filed.  The time limits are as follows:

Prior Bankruptcy                     New Bankruptcy                     Waiting Period

Chapter 7                                Chapter 7                                8 Years

Chapter 7                                Chapter 13                              6 Years

Chapter 13                              Chapter 7                                4 Years

Chapter 13                              Chapter 13                              2 Years

Many times, after seeing this chart, individuals will think that they are not able to file for bankruptcy again for a certain length of time.  However, this is not necessarily true.  The time limits prevent individuals from receiving a discharge through a bankruptcy, but they do not always prevent individuals from filing another bankruptcy case.  It is possible to file a bankruptcy case and receive the protection from creditors the bankruptcy filing imposes without the potential for a discharge.  Depending on your specific case, this could be beneficial to you.  Providing the reason you are filing, the length of time until a discharge can be received,  and the type of bankruptcy you want to file, you may be able to file a Chapter 13 bankruptcy. This would assist with postponing garnishments, foreclosures, repossessions, and other types of collection by creditors.

For example, if a debtor just received a discharge through a Chapter 7 one year ago, and now they are behind on mortgage payments for a house that they want to keep and have a pending foreclosure, would they be of luck? Definitely not! A Chapter 13 plan can be proposed to pay the back payments on the house over 48 months. At the end of the 48 months, as long as all of the post-petition mortgage payments are made as well, the client is caught up on their house. Even though no discharge is received, since the waiting period for a Chapter 7 filing to a Chapter 13 filing is six years to be eligible for a discharge, the bankruptcy filing was still beneficial to the client.  They caught up on their house, and are able to keep it.

Depending on what debts you have and your income, a Chapter 13 with a discharge can provide many of the same benefits of a Chapter 7 without the longer waiting period. While many individuals do not like the idea of entering into a repayment plan, if you are eligible for a discharge through a Chapter 13, but not a Chapter 7, do not automatically eliminate the possibility of a Chapter 13 bankruptcy being a viable option for you.

For information on your specific situation, call your St. Louis Bankruptcy attorney to schedule a free consultation. An attorney from our office will provide you with the information that you need to make an informed decision.

This entry was posted in Automatic Stay, Bankruptcy filing, Bankruptcy General, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Collection Harassment, Discharge of Debt, Foreclosure. Bookmark the permalink.

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