Every so often I get asked about what the possibilities are of filing a Chapter 20 bankruptcy. They are not asked for by name mind you given that not too many people know what a Chapter 20 bankruptcy is and also because the Bankruptcy Code does not mention them by name. A Chapter 20 bankruptcy is essentially when you have filed a Chapter 7 bankruptcy and then subsequently file a Chapter 13 bankruptcy (7 + 13 = 20). Normally you have to wait 4 years after filing a Chapter 7 bankruptcy before you can file a Chapter 13 bankruptcy case and be eligible to receive a discharge of your debts.
Situations for a Chapter 20 Bankruptcy
Wouldn’t it be simpler and cheaper to just file a Chapter 13 the first time around? Yes, most of the time it would be simpler if you had just filed a Chapter 13 so there are not as many issues. However, that is sometimes not possible due to the circumstances. People sometimes file for a Chapter 7 first to discharge of all their unsecured debts (medical bills, credit cards, personal loans, etc.) before filing a Chapter 13 because they may be over the debt limitations under 11 U.S.C. §109(e). You are not eligible to be a debtor under Chapter 13 if your unsecured, liquidated, non-contingent debts exceed $383,175.00, or secured, liquidated, non-contingent debts exceed $1,149,525.00. Another scenario may be you file for a Chapter 7 to discharge your unsecured debt, but later find yourself with mortgage arrears and are facing foreclosure so you need to file a Chapter 13 bankruptcy case to save your home.
If you are considering a Chapter 20 bankruptcy you should definitely consult with an experienced bankruptcy attorney to help you with the case as it is complicated.
At Bond & Botes, our affiliated offices offer free initial consultations. Please feel free to call one of our conveniently located offices to set up a private consultation with one of our experienced attorneys. We will analyze your situation and help you to make the best decision possible to help you eliminate your debt once and for all.
Grant McNutt is a Managing Attorney at the Bond & Botes Law Offices in Florence and Haleyville, Alabama. He holds a Bachelor of Science from the University of Alabama, and a Juris Doctorate from the Birmingham School of Law. He has been practicing Consumer Bankruptcy Law since 1999. Read his full bio here.