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Rules for Successive Bankruptcy Filings

There are different rules on when a debtor may file successive bankruptcy petitions after being granted a discharge depending on the previous chapter filed. If the previous bankruptcy was a Chapter 7 and the new filing is a Chapter 7 or 11 then the debtor must wait 8 years from petition to petition.

Bankruptcy lawyer Eric Lanigan and Roddy Lanigan of Lanigan and Lanigan in Winter Park, Florida, have 36 years and five years experience respectively filing bankruptcy. When you need questions answered call them for an appointment.= to see how bankruptcy rules apply to your specific financial situation. 

If the previous filing was a Chapter 13 and the new filing is a Chapter 7 then the debtor must wait 6 years from petition to petition unless payments under the Chapter 13 plan totaled 100% of allowed unsecured claims or at least 70% of such claims and was performed in good faith with debtor’s best effort.  Moreover, if the previous filing was a Chapter 13 and the new filing is a Chapter 13 then the debtor must wait 2 years from the previous discharge to the current petition.

One such device that has become increasingly popular to individual debtors is a so-called Chapter 20: filing a Chapter 13 plan immediately following the grant of a discharge in Chapter 7. Chapter 20s are generally taken by debtors who seek the benefits of a Chapter 13 in order to retain valuable property (such as a home) or to modify a nondischargeable debt but first eliminate all dischargeable debt through the earlier Chapter 7. Thus, this process greatly reduces the payments required to be made under the Chapter 13 plan.

Although seemingly contrary to the policy of Chapter 13, most of the courts have concluded that the filing of successive petitions under Chapters 7 and 13 is not, in itself, a sufficient basis to deny confirmation. However, the 2005 Bankruptcy Reform Act attempts to limit “Chapter 20″ bankruptcies by imposing limits on the filing of successive bankruptcies. Some courts even allow the Chapter 13 to be filed after the Chapter 7 discharge but before the case is closed.

When you file a Chapter 13 after a Chapter 7 without waiting four years, you cannot receive a discharge in the Chapter 13. Even though one cannot obtain a discharge in the Chapter 13 immediately after a Chapter 7, some debtors still file for Chapter 13 protection while the Chapter 7 petition is still pending. Nevertheless, many courts are still split on whether this goes against the main policies of bankruptcy.

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