Prior to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, there was a one-two punch in bankruptcy court called the Chapter 20 bankruptcy. It’s not in the official bankruptcy code, but it goes like this: file Chapter 7 bankruptcy and get as much debt discharged as you can. Then, file Chapter 13 and get the rest bundled into an easier-to-swallow payment plan than you could have gotten on your own. This would include any assets that were exempt from your Chapter 7 filing.
BAPCPA changed all that by placing waiting periods on bankruptcy discharges. Once you have gotten a Chapter 7 discharge, you can’t get another for eight years. You can’t get another Chapter 13 discharge for 4 years after receiving one, and you can’t receive a discharge under Chapter 13 for four years following a Chapter 7 discharge. But in a Chapter 20 after BAPCPA, discharge of debt is no longer the goal.
In Chapter 20 bankruptcy, you file the Chapter 7 and go through the process to get as much debt discharged as you are able. However, you are left with other assets that were exempt, you may want to keep, but are behind on payments. By filing Chapter 13 bankruptcy, you once again fall under the protection of the automatic stay. During your case, you have time to get current on your home, car, or other property before your discharge is denied and you are on your own again. You can file the follow up Chapter 13 case as long as you have a separate independent financial reason to do so. However, you may not be able to get rid of a second mortgage or home equity line of credit without the discharge, so whether Chapter 20 will work for you depends on what you want to accomplish.
Over the past 30 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.
About the Author
Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More