Do you qualify as a debtor in chapter 7 bankruptcy? I am not speaking here about technical things like passing the means test or equalizing your monthly income and “allowable” monthly expenses and payroll deductions. I am referring to whether you, just sitting there reading this article, meet the timing requirements for chapter 7 relief with no other considerations.
- You have not been granted a discharge in a chapter 7 bankruptcy filed within the past 8 years.
- You have not been granted a bankruptcy discharge in a chapter 13 case filed in the past 6 years.
8 year look back for a new chapter 7
It is an unfortunate fact. Many people file bankruptcy more than once. As you can imagine this really bothered the credit card industry. Before the law change in 2005 the span between successive bankruptcy filings was 6 years for a chapter 7 case, and there was no time required between a chapter 7 case and a subsequent chapter 13 case.
I had numerous clients who based their financial planning on their ability to unload their debt every 6 years. Congress changed that, again in the name of protecting you. Now to file chapter 7 there is a look back rule from filing date to filing date of 8 years. Imagine the surprise my every 6 year clients had when they came in to find that they have to wait two more years. This is to file chapter 7 after a previous chapter 7.
You can file a chapter 13 anytime after filing a chapter 7 case. However, if you want, or need, a discharge in the chapter 13, like if you want to strip a mortgage, there is a four year look back from filing date of your chapter 7 to the filing a date of your chapter 13. If you don’t care about, or need a chapter 13 discharge then you can file again in under 4 years. Who wouldn’t care about a chapter 13 discharge? If you discharged your unsecured debt already, but need to pay off non-dischargeable tax debt, or you want to bring your mortgage current a discharge would not matter.
6 year look back for a new chapter 7 with a prior chapter 13
Some attorneys like to call it a preference for chapter 13 cases. I guess when you practice in an area of law that is totally governed by statutory construction and the whim of the law makers and lobbyists, you get a bit cynical. in 2005 the bankruptcy reform law called BAPCPA revamped everything. They left the look back from a previous chapter 13 case to a new chapter 7 case the same. Do they want you to pay the money you owe to their buddies who own the banks? You bet they do. My take on this issue is that they just forgot to include this look back in the change. It is a mistake that can benefit you. So, you can file chapter 7 if you previously filed a chapter 13 and got a discharge after 6 years.
The first consideration if you need to file bankruptcy is have you filed before? If so, then I need to know:
- Where did you file
- When did you file
- What chapter did you file, and
- Did you get a discharge?