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Can You File Chapter 13 After You File Chapter 7?

Can You File Chapter 13 After You File Chapter 7?

Is It Possible to File Chapter 13 After Filing Chapter 7?

If you’ve recently filed for Chapter 7 bankruptcy (which liquidates assets to discharge unsecured debts) and received a discharge, you might find yourself wondering whether filing for Chapter 13 (which involves a repayment plan) is a possibility if your financial struggles aren’t completely behind you.

In some cases, Chapter 7 bankruptcy may not be enough to address all your debts, and you might need to explore other options to regain control of your finances.

So, can you file Chapter 13 after Chapter 7 as per bankruptcy law in the US? The short answer is yes, but there are important rules and waiting periods to understand before moving forward.

In 2023, there were 182,630 Chapter 13 bankruptcy filings by debtors in the United States. [1]

Eligibility for Filing Chapter 13 After Chapter 7

Filing for Chapter 13 bankruptcy after Chapter 7 is possible, but there are specific eligibility requirements and timing rules that you must meet. Here’s a breakdown of what you need to know:

Mandatory Waiting Period

The primary rule is the waiting period between filing for Chapter 7 and Chapter 13 bankruptcy. You must wait at least 4 years after receiving a Chapter 7 discharge before you can file for Chapter 13.

Alternatively, if you previously filed for Chapter 13 and are now considering Chapter 7, you typically must wait six years before you can file for a new bankruptcy case

This waiting period prevents individuals from using Chapter 7 to quickly eliminate their debts, only to reorganize their remaining debts under Chapter 13 shortly after. It ensures that bankruptcy is not being abused to avoid paying certain creditors repeatedly.

Mandatory Waiting Period

Exceptions to the Waiting Period

While the standard waiting period is 4 years, there are some situations where the waiting period can be reduced or waived:

Good Faith Filing

When filing for Chapter 13 after Chapter 7, you must demonstrate that your filing is made in good faith and not for the sole purpose of evading debt repayment. If the court believes you are abusing the bankruptcy system, they can dismiss your case.

Discharge Impact

If you were granted a Chapter 7 discharge, any debts discharged in that case generally cannot be included in your Chapter 13 repayment plan. However, Chapter 13 can help with debts that weren’t discharged in Chapter 7 (like certain taxes, child support, or alimony), and it can also assist in catching up on mortgage arrears or car payments.

Filing Chapter 13 after Chapter 7 is an option, but it comes with timing rules, eligibility criteria, and some important exceptions.

The 4-year waiting period is the key rule to be aware of, but if you’re dealing with debts that weren’t eliminated in Chapter 7 or have missed mortgage payments, Chapter 13 could provide the financial relief you need.

Discharge Impact

Benefits of Filing Chapter 13 After Chapter 7

Filing Chapter 13 after Chapter 7 offers advantages like:

Benefits of Filing Chapter 13 After Chapter 7

Consequences of Filing Chapter 13 After Chapter 7

While Chapter 13 can provide significant relief, it also comes with challenges, such as long repayment periods, ongoing financial monitoring, and potential impacts on your credit. Here’s what you need to consider before moving forward.

Consequences of Filing Chapter 13 After Chapter 7

Challenges and Considerations

Filing Chapter 13 after Chapter 7 can be helpful, but there are several key challenges to consider:

New Debt During or After Chapter 7

Eligibility Requirements

Any individual, even if self-employed or operating an unincorporated business, is eligible for Chapter 13 relief as long as the individual’s combined total secured and unsecured debts are less than $2,750,000 as of the date of filing for bankruptcy relief. 11 U.S.C. § 109(e). [2]

Financial Discipline

Credit Score Impact

Both Chapter 7 and Chapter 13 will initially lower your credit score. Chapter 7 tends to have a larger short-term impact, but both will stay on your credit report—Chapter 7 for 10 years and Chapter 13 for 7 years.

Rebuilding Credit

  • Make on-time payments under Chapter 13.
  • Use secured credit cards or small credit accounts to rebuild your credit.
  • Monitor your credit report regularly for accuracy.
Rebuilding Credit

Filing Chapter 13 after Chapter 7 can help manage debt and protect assets, but requires meeting eligibility criteria and financial discipline. While bankruptcy impacts your credit, rebuilding is achievable with patience and smart financial habits.

Contact Richard West today for a free consultation to start rebuilding your financial future.

Sources:

[1] Statista. (n.d.). Statista – The Statistics Portal. https://www.statista.com/

[2] Chapter 13 – Bankruptcy Basics. (n.d.-b). United States Courts. https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

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Useful Calculators

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