Call Us Today: 229-888-1105
Address: 417 Pine Ave. Albany, GA 31701
Blog Layout
What Is Chapter 20 Bankruptcy, and How Can It Help You?
Feb 28, 2020
This is a subtitle for your new post
When a person needs to file bankruptcy, they generally choose either Chapter 7 or Chapter 13 claims. But there are situations when it may be advantageous to plan on filing both types. While Chapter 20 is not an official bankruptcy chapter, it's actually a combination of Chapters 7 and 13. How can you do file for Chapter 20 bankruptcy? And why might it help your finances even more? Here is a short guide to Chapter 20 bankruptcy.
What Does Chapter 20 Mean?
The name, Chapter 20, doesn't refer to an actual bankruptcy code. It's a combination of the numbers 13 (Chapter 13) and 7 (Chapter 7). This is the strategy of filing for Chapter 7 bankruptcy to have some of your debts fully discharged. Then, you would file Chapter 13 to secure a payment plan for what's left.
Why Would You Need Both Chapters?
There are basically two situations when a debtor might need the service of both bankruptcy chapters in order. Both reasons involve the size and nature of the debt load.
The first scenario is when a person's debt exceeds the limit for Chapter 13 bankruptcy. In Chapter 13, your debt cannot be more than $1,257,850
in unsecured debt or $419,275 in secured debt (as of 2019). If your debt is over this amount, you may be able to reduce the total through a Chapter 7 discharge first. Then, you would proceed back to Chapter 13.
The second scenario is when a significant portion of your debt will not be discharged through Chapter 7. Non-dischargeable debt (such as certain tax debts or student loans), as well as secured debts that you reaffirm (usually car loans and mortgages), may still not be affordable. One solution, then, is to seek a repayment plan for remaining debts to make them manageable.
What Are the Other Advantages?
In addition to these two common reasons to utilize two claims, a second filing has a few other benefits. If you just need some time in order to get current with a non-discharged debt, for instance, filing for Chapter 13 provides an automatic stay that could provide the time you need.
Also, if you need to stretch out any debts longer than their allotted term (such as IRS debts), a five-year payment plan reduces monthly amounts due. And finally, you may be able to reduce or eliminate some secured debts through a process known as 'lien stripping'.
What About the Time Limits?
The bankruptcy system does have some built-in safeguards to prevent abuse, including a minimum time limit between receiving two discharges. If you file Chapter 7, you must wait four years to receive a discharge through Chapter 13. But this doesn't prevent you from filing and getting on a repayment plan - thus receiving the above benefits - without an actual discharge.
If you do seek a discharge after your payment plan period ends, you may need to wait until the time limit has expired. But because the clock begins on your filing date, it is likely to be less than four years.
Is Chapter 20 Guaranteed?
Using this strategy to fix your debt situation is controversial. While it does adhere to the letter of the law, some judges feel it does not represent an attempt to operate on good faith. In order to be granted, your bankruptcy petition - including debt lists and payment plans - must be proposed with the intent of being honest and having the right motives. Proposals to 'lien strip', in particular, may often be denied.
At Custer, Custer & Clark LLC Attorneys at Law
, we understand the value of Chapter 20 filings as well as other strategies. We can help you find the best route for your circumstances. If concerns about either chapter of the bankruptcy code are preventing you from seeking the relief you need, call today to learn more about a Chapter 20 plan.
Filing for bankruptcy can help you get rid of most of your debts, if you are careful. Here are common bankruptcy mistakes to avoid as you file.
Even the most financially disciplined and prudent individuals can find themselves in debt. And sometimes, the best way out of unmanageable debts is to file for bankruptcy.
Filing for Chapter 7 bankruptcy can be a complicated process. Learn what documents are required and what documents will help your case.
Some individuals shy away from talking about bankruptcy because of all the myths surrounding it. Learn the truth by reading this blog.
If you want to take a house loan, lenders look at different factors, including bankruptcy status. Read on to learn about getting a mortgage post-bankruptcy.
Can you improve your credit score during chapter 13 bankruptcy? You can. Discover some tips to help you enhance your credit score.
Do you plan to file bankruptcy but also need to — or choose to — move at the same time? Discover a few important answers to common questions.
Two key elements of bankruptcy work together to protect your assets. Read on to learn what you need to know about exemptions and equity in bankruptcy.
One often-overlooked element of all bankruptcy filings is the automatic stay. What is this stay? How can it help you? Discover a few answers.
Bankruptcy cases don't always go as planned. Job loss is one adverse situation that can affect your bankruptcy. Learn more about the effects.