Monthly Archives: January 2016

If you have filed a bankruptcy in the past, can you file again?

Successive Bankruptcy Filings

The rules regarding successive bankruptcy filings is actually quite simple.

Chapter 7 –> Chapter 7

If you have filed a Chapter 7 case in which you received a discharge, you cannot file another Chapter 7 case until 8 years have passed since the date that you filed the first case.

  • For instance, if you filed a Chapter 7 case on April 1, 2004 and you received a discharge, you would be ineligible to file another Chapter 7 case until April 2, 2012.

Chapter 7 –> Chapter 13

If you have filed a Chapter 7 case in which you received a discharge, you cannot obtain a discharge in a Chapter 13 case that is filed within 4 years after the Chapter 7 case was filed.

  • For instance, if you filed a Chapter 7 case on April 1, 2004 and you received a discharge, you could not receive a discharge in a Chapter 13 case unless it was filed after April 4, 2008
  • However, there are many benefits that can be had from a Chapter 13 other than the discharge. For instance, if you have lots of unsecured debt¬†and you are behind in arrears on your home, you may be able to file a Chapter 7 bankruptcy to wipe out all of your unsecured debt, and then file a Chapter 13 to deal with the arrears. These are commonly called “Chapter 20 cases” (13 + 7 = 20). This is just one example of how you can use the flexibility of a Chapter 13 plan to restructure your debts.

What is “Lien Stripping”?

Lien-stripping is the process of bifurcating (splitting) a secured claim into two separate claims, the secured portion and the unsecured portion. For instance, you have a home that is worth $500,000 and you have a first mortgage balance of $300,000 and a second mortgage balance of $300,000. Since the house is only worth $500,000 and the second mortgage is partially secured in the amount of $200,000 and partially unsecured in the amount of $100,000, the unsecured portion would be “stripped off” and treated as a general unsecured debt. Through a Chapter 13 you could split these claims into these two categories and you would be required to pay the secured portion the $500,000, but the unsecured portion could be paid anywhere between 0-100% depending on many other factors with the difference being discharged at the conclusion of your plan.

A similar process can be done with vehicles called a “cram down”.