If you have filed for Chapter 7 bankruptcy in the past, you have likely had all of your qualifying debt wiped off. Once you received the official discharge after filing for Chapter 7 bankruptcy, debts like personal loans, medical bills, and credit card balances were chalked off. But you are still in debt. You know it only makes sense to file for Chapter 13 bankruptcy. But what can you expect when filing Chapter 13 bankruptcy after Chapter 7, you might wonder?
Well, it is worth noting that you can file a Chapter 13 bankruptcy anytime after you have filed for Chapter 7, but it will have to be 4 years from the filing date of your previous chapter 7 to get a discharge of debts. Chapter 13 bankruptcy has certain unique benefits that are absent in Chapter 7. Here are some of the reasons you may want to file for Chapter 13 bankruptcy after Chapter 7:
- You are Unable to Keep Up with Car Loan and Mortgage Payments
Chapter 7 does not make provisions for you to try to save your home. If you file for Chapter 7 bankruptcy, you can retain your house if you can maintain your payments going forward, you are current on your mortgage, and you can exempt all your equity.
- You are Unable to Keep Up with Alimony or Child Support
Alimony and child support fall under domestic support obligations and are considered priority debts. As a result, they cannot be wiped off in bankruptcy. However, Chapter 13 bankruptcy can help you catch up if you are struggling to fulfill these responsibilities.
- You Have Priority Tax Bills
In bankruptcy, recently incurred tax bills are considered priority debts. For this reason, they cannot be discharged when you file for Chapter 7. However, filing for Chapter 13 bankruptcy gives you a chance to pay off these debts through a repayment plan. This will also give you the benefit of automatic stay – the injunction that prevents creditors from making any collection efforts while you are in bankruptcy.
Qualifications for Chapter 13 Bankruptcy
The bankruptcy code prohibits businesses, commodity brokers and stockbrokers from filing Chapter 13, even if the incurred debts are personal.
You will be eligible to file as an individual if you can demonstrate you have the means to follow through with a repayment plan. To achieve this, you must disclose your source of income and send this information to the court within 14 days of filing your petition. Income from a variety of sources can qualify for Chapter 13, including wages, government benefits, social security payments, property sale proceeds, pension, and unemployment compensation.
It is also important that your tax filings are current. You must present proof showing your state and federal tax returns over the past four years. Without this, the court will delay your case until you can provide them, and the case will be dismissed if you are not able to provide transcripts of your tax returns or fail to file the unfiled returns.
The court will evaluate your case – reviewing your debt and income statements. They will now reach out to your creditors and schedule a date for hearing; the goal here is to determine whether your repayment plan is acceptable. Once you complete your repayment within a 3– to– 5– year period, the Chapter 13 bankruptcy case will be discharged.
Life After Chapter 13 Bankruptcy
Once a repayment plan is approved by the court, it is now up to you as the debtor to draw up a budget to make it work. Failure to meet the payment terms will bring your case back to court for another review, and this could require that you sell off your property to settle debts or increase your monthly payments.
Filing Chapter 13 bankruptcy after Chapter 7 gives you freedom from creditors. However, it will be listed on your credit report for ten years; a debtor in this situation may find it difficult to secure extra credit for years.
Chapter 13 bankruptcy is financially useful for those struggling with serious debts who face the possibility of losing their homes to foreclosure or can no longer make the current monthly credit card payments. Before taking this path, it is important you consult a bankruptcy attorney for legal advice.
About the Author: Roxane Kaye, has been practicing law since 2002. She is admitted to practice law in Michigan state courts and before the Federal Bankruptcy Court of Eastern Michigan, Southern Division, as well as the Federal District Court of the Eastern District of Michigan. Roxane covers cities such as Burton, MI, Flint, MI, Fenton, MI, Beecher, MI, Lapeer, MI, Waterford, MI, Auburn Hills, MI, Pontiac, MI, Howell, MI, Owosso, MI, Wixom, MI, Rochester, MI, Rochester Hills, MI, Novi, MI, and South Lyon, MI.
You may contact Roxane below:
Roxane M. Kaye
Kaye Law Office, PLLC
8161 S Saginaw St
Grand Blanc, MI 48439
