subject: CC Brown law – Chapter -20 Bankruptcy [print this page] CC Brown law Chapter -20 Bankruptcy CC Brown law Chapter -20 Bankruptcy
There are some circumstances where it is advantageous to file for Chapter 7 bankruptcy, then forthwith after receiving a discharge to file for Chapter 13, in what is called a Chapter 20 Bankruptcy. Some courts have even granted a debtor to file a Chapter 13 case while his Chapter 7 case was still pending. However, most courts have required that the Chapter 7 case be closed first because of the difficulties of having 2 concurrent cases dealing with the same debts.
Factors that Courts Consider in Whether There is Good Faith in a Chapter 20 Serial Filing:
Since good faith can only be determined by the totality of circumstances, the courts have developed a list of factors to consider for a Chapter 20,
A non-exclusive list of factors includes,
The propinquity in time of the Chapter 13 filing to the Chapter 7 filing.
Percentage of proposed repayment.
Debtor's past bankruptcy filings and honesty in representing facts.
Any unusual or exceptional problems facing the debtor.
The nature and amount of unsecured claims.
Whether a major portion of the claims sought to be discharged arises out of pre-petition fraud or other illegitimate conduct and the debtor proposes only minimal repayment of such claims.
Whether, despite the most flagrant pre-filing conduct, the plan represents a good faith effort to satisfy creditors' claims.
Whether the debtor has made some change in circumstances between the filings that suggests a second filing was appropriate and that the debtor will be able to comply with the terms of a Chapter 13 repayment plan.
Whether the 2 filings attain a result that is not permitted in either Chapter standing alone.
Whether the 2 filings are an attempt to manipulate the bankruptcy system or are an abuse of the purpose and spirit of the Bankruptcy Code.
Impediments to Chapter 20:
The BAPCPA has made it more baffling to successfully complete a chapter 20. First, the BAPCPA introduced a means test to find out whether a debtor can file for Chapter 7. If the debtor's income is too high, then they will be forced to file for Chapter 13. The BAPCPA also introduced 362(d)(4)(B) that allows a secured creditor of real property to be granted relief from the automatic stay if the creditor can show that the debtor's serial filings was a means of delaying, hindering, or defrauding the creditor.
Another factor which fend off you from successfully engaging a Chapter 20 maneuver is the lack of good faith. If the court or the trustee conceives that you are using bankruptcy to defraud your creditors, then you may not receive a discharge.
Disadvantages of Chapter 20:
There are several drawbacks to a Chapter 20. First, it will require longer period to get your fresh start, especially you cannot discharged from Chapter 13 bankruptcy not less than 4 years after filing for Chapter 7. However, this is not too much of a disadvantage, since it takes 4 to 6 months to receive a chapter 7 discharge from its initial filing and a minimum of 3 years for a chapter 13 bankruptcy. You will also have to pay fees for both filings.
Actually, what is not a drawback is that the 2 Bankruptcy filings will not be on your credit reputation longer than just a Chapter 7 filing, because a Chapter 7 filing can be listed on credit reports for 10 years from the filing date whereas a Chapter 13 can only be listed for 7 years from its start. This means that by the time the Chapter 7 filing is dispatched from your credit report, the Chapter 13 bankruptcy will have already been expunged from your report.
