How can you file chapter 7 bankruptcy after only 6 years from your last case was filed? This is precisely the question that arose for one of my clients last month.
Here’s a little background information. This client originally filed chapter 13 bankruptcy in 2000. They successfully completed the plan and discharged the debt. In 2008 the same client, husband and wife, came to me again with more debt problems. Owing to employment issues they again fell behind on the mortgage.
Just shy of 8 years since the last bankruptcy case I file another chapter 13 for them. Just because good people file to reorganize their debt the economy does not always comply. The husband’s company went through a merger. All jobs and pay levels suddenly became in doubt.
In the “when it rains it pours” department, the wife became pregnant. How could this happen? Your guess is as good as mine. Here’s a tip: Kids never come along at the best time for you. They pick their own time. Due to the combination of factors they were unable to continue in the chapter 13 case. They needed to be in a chapter 7 case.
It is now more than 8 years since the first chapter 13 case. What is the proper course of action for this client?
1. Can I convert the 13 case to a chapter 7? That would be easiest and least expensive for the client.
First I want to mention that early on in personal computing, software designers hid amusing things in programs called Easter eggs. If you were able to find one it was always fun and a good experience. Software and movies today still have them.
The 2005 Bankruptcy Reform Act is no exception to this. Everyone knows that successive chapter 7 filings now must be 8 years apart. Previous to the law change it was 6. In 2005 things were little different than they are today. Big law. No one reads it. Everyone votes for concepts. The Bankruptcy Reform Act has a big colorful Easter egg.
Everyone was so worried about extending the time for filing the next chapter 7 that they forgot to include this new limitation for chapter 13 cases. What does this mean? If you have you have a chapter 13 filing, the time between The filing date for the chapter 13 case and a new chapter 7 is still 6 years.
For my clients, I was able to convert the chapter 13 to a chapter 7 case since the second filing date was more than 6, but less than 8 years. I served my cleints by getting them what they needed and saving them the cost of a new chapter 7 bankruptcy case filing.
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