Filing Chapter 13 Bankruptcy after DISCHARGE of Chapter 7

Chapter 13 Bankruptcy can be filed at anytime after receiving a discharge from a prior Chapter 7. The problem is, you must wait a minimum of four years to FILE Chapter 13 after your previous FILING of Chapter 7 to receive a discharge.

What is a Bankruptcy Discharge? The Discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters and personal contacts. What does this mean in simple terms? It means in the case of Chapter 7, after filing, you will receive a "discharge" of your debts - you will no longer owe the debts discharged and the creditors cannot try to make you pay or harass you. A discharge in Chapter 13 means that after you have completed the plan (3 - 5 years) and have made all your payments, you will receive a discharge of debts. Again, this means that the creditors cannot collect on the debts or harass you to pay.

The rule to this is YOU MUST WAIT FOUR YEARS BETWEEN FILINGS. The rule is the four years has to be from FILING DATE TO FILING DATE. Not discharge to filing or discharge to discharge. Hopefully, this makes sense.

Say you filed for Chapter 7 on January 01, 2011, you would have to wait until January 01, 2015 to file Chapter 13 and receive a discharge. Normally after filing Chapter 7 bankruptcy you would receive a discharge between three to six months after filing. Normally, a Chapter 13 bankruptcy would receive a discharge after the debtors complete the 3-5 year payment plan to the Trustee.

At anytime after filing a Chapter 7, after receiving a discharge, you could file a Chapter 13. But the problem will be that you cannot receive another discharge unless you had waited the four year period between filings. What would happen is that if you did not wait the four year period, you would enter into a Chapter 13, pay your monthly payments to the trustee, finish in three to five years and still owe the unpaid portion of the debts to your creditors.

However, at the end of the three to five year period that you made payments to the court, you may have reached the eight year mark from the FILING of your last Chapter 7. You are now eligible to file for Chapter 7 again, as long as your income is not above the state median for your family( a Means Test will be the deciding factor). You will then be able to discharge all remaining debts and possibly remaining taxes (state and IRS), if any were owed. Remember though, Chapter 7 stays on your credit for ten years, Chapter 13 remains on your credit report for 7 years. The choices after completing the Chapter 13 are that if you are not eligible for a discharge, you might be able to file a Chapter 7 (if your last filing of Chapter 7 was 8 ago) or to file a Chapter 13 again - the rule is that you need to wait 2 years between Chapter 13 filings. Another option may to request a "Hardship Discharge" from the court.

A Hardship Discharge:

• The Chapter 13 Hardship Discharge

After confirmation of a plan, circumstances may arise that prevent the debtor from completing the plan. In such situations, the debtor may ask the court to grant a "hardship discharge." 11 U.S.C. § 1328(b). Generally, such a discharge is available only if: (1) the debtor's failure to complete plan payments is due to circumstances beyond the debtor's control and through no fault of the debtor; (2) creditors have received at least as much as they would have received in a chapter 7 liquidation case; and (3) modification of the plan is not possible. Injury or illness that precludes employment sufficient to fund even a modified plan may serve as the basis for a hardship discharge. The hardship discharge is more limited than the discharge described above and does not apply to any debts that are non-dischargeable in a chapter 7 case. 11 U.S.C. § 523.

In a nutshell, the time frames between discharge eligibility are as follows:

8 years between Chapter 7's

2 years between Chapter 13's

4 years between a Chapter 7 and Chapter 13

6 years between a Chapter 13 and Chapter 7(if the Chapter 13 has been paid to under 70% of the plan - the plan being total designated to be paid to trustee over the 3-5 year payment plan).

The time is counted from FILING to FILING — not from first discharge to second filing.

However, at ANY time, you can file a chapter 13 bankruptcy. But just know that at the end of the 3-5 year payment plan, the remainder of the debt will still be owed.

There is another option: File a Slow Pay Motion with the court. This will help to keep your paycheck from being garnished, will keep the creditors from harrassing you and works if you only have one or two debts. A Slow Pay Motion will allow you to make small payments while being able to pay your living expenses. An attorney is not needed to file this motion. The form can be found at the County Clerk's office.

If taxes are owed, there are two options. If the IRS (or state) is moving toward garnishing your wages and you were unable to come to an agreement for an installment agreement, a Slow Pay Motion can be filed. Another option in regards to taxes is to file "Uncollectible Status". This is a provision that the IRS has, you will need to check with your state to verify if they have this option. Unfortunatley, in either an installment agreement or Uncollectible Status, the penalties and interest contine to accrue.