Why file a bankruptcy if I am not eligible for a discharge?

There are time limits between bankruptcy filings as to when you are eligible to receive a discharge. These time limits depend on which chapter of bankruptcy you previously filed and which chapter of bankruptcy you are attempting to file now. The time limits look not at the discharge dates but at the date the cases were filed.

The time limits are as follows:

Prior Bankruptcy              New Bankruptcy              Waiting Period

Chapter 7                            Chapter 7                            8 years from the filing date of the prior bankruptcy

Chapter 13                          Chapter 7                            6 years from the filing date of the prior bankruptcy

Chapter 7                            Chapter 13                          4 years from the filing date of the prior bankruptcy

Chapter 13                          Chapter 13                          2 years from the filing date of the prior bankruptcy

You look at the chart and you realize you cannot file for another few months or even few years depending on what chapter of bankruptcy you want to file. Nothing you can do right? Not necessarily. The time limits prevent you from receiving a discharge but they do not necessarily prevent you from filing a bankruptcy. Depending on your reasons for filing, the length of time until a discharge can be received, and the chapter of bankruptcy you want to file, you may be able to file a Chapter 13, even without a discharge to postpone a garnishment, foreclosure or other type of collection.

For example, a client comes in a just received a discharge through a Chapter 7 one year prior. However, now they are behind on mortgage payments for a house that they want to keep and have a pending foreclosure. Out 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 post-petition mortgage payments are made as well, the client is not caught up on their house. Mission accomplished and no discharge needed.

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 so if you are eligible for a discharge through a Chapter 13, but not a Chapter 7, do not automatically eliminate the possibility of bankruptcy being a viable option for you.

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