Do Consumers File for Chapter 20 Bankruptcy?

Are you familiar with Chapter 20 bankruptcy in Oak Park? If you have not heard of Chapter 20 bankruptcy, you are not alone. It is not actually a chapter of bankruptcy relief under the U.S. Bankruptcy Code, but instead refers to a combination of Chapter 7 and Chapter 13 bankruptcy. When you add Chapter 7 and Chapter 13 together, in effect you end up with a “Chapter 20” bankruptcy. When consumers opt for Chapter 20 bankruptcy, they do not file for both Chapter 7 and Chapter 13 at the same time. Instead, debtors typically will file for Chapter 7 and then, almost immediately after receiving a discharge, will file for Chapter 13 bankruptcy.
What are the benefits of Chapter 20 bankruptcy, and why would any individual consumers want to take this route?
High Consumer Debts and Significant Secured Debt You Want to Keep can Make Chapter 20 Bankruptcy a Good Option
Why would anyone file for Chapter 7 bankruptcy, receive a discharge, and then turn around and file for Chapter 13 bankruptcy? In most situations, the debtor has too much secured or unsecured debt to file for Chapter 13 bankruptcy. Currently, if you have unsecured debts of $394,725 or more, or secured debts of $1,184,200 or more, you are not eligible to file for Chapter 13 bankruptcy regardless of whether or not you can pass the means test.
Given that the costs to file for Chapter 11 bankruptcy are high for consumers and may not produce the best result, consumers who want to retain their homes or motor vehicles may find that Chapter 20 bankruptcy is the best course of action. In other words, when debtors want the power of Chapter 13 bankruptcy to prevent foreclosure and to save a home but their debt makes them ineligible for Chapter 13 bankruptcy, seeking “Chapter 20” bankruptcy could be a solution.
How Chapter 20 Bankruptcy Works for Illinois Consumers
If a debtor has too much unsecured debt to qualify for Chapter 13 bankruptcy but can pass the means test, then she can go through the Chapter 7 bankruptcy proceeding and receive a discharge of unsecured debt. Now, once the Chapter 7 discharge happens, the debtor no longer has too much debt to file for Chapter 13 bankruptcy. As such, once the discharge of unsecured debt happens, the debtor can immediately file for Chapter 13 bankruptcy in order to save his or her house by getting extra time to make payments, or to make payments on secured debts that were not eligible for discharge under the Chapter 7 proceeding.
Keep in mind that if you do file for Chapter 20 bankruptcy, you will not be able to receive a discharge on the Chapter 13 bankruptcy immediately after receiving the Chapter 7 bankruptcy discharge unless four years pass. The benefit of Chapter 20 bankruptcy is that you can discharge a large amount of unsecured debt to make yourself eligible to file for Chapter 13 bankruptcy, thereby giving yourself time to pay down debts and/or to prevent foreclosure on your home.
Contact an Oak Park Bankruptcy Lawyer
If you have questions about Chapter 20 bankruptcy, a consumer bankruptcy lawyer in Oak Park can help. Contact the Emerson Law Firm for more information.
See Related Blog Posts:

Comments

Post a Comment

Popular posts from this blog

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti
Read more

Learning About Different Types of Wills

Whether you are young or old, single or married, wealthy or with limited financial means, healthy or dealing with a medical condition, it is important to make a will. Many people have incorrectly heard that wills are only necessary for particular people, such as those with a substantial amount of assets or for older adults in poor health. Yet wills are critical for adults of all ages, and an experienced Oak Park estate planning lawyer can help you to make one. Before you begin working with a lawyer on a will, you might start conducting your own research into wills in Illinois and the requirements for a valid will. In so doing, you are likely to come across information about many different types of wills, and you are probably going to wonder whether you will need more than one kind of will. In short, there are different terms that can be used to describe the form or function of a will, as well as some distinct types of wills. Our Oak Park estate planning attorneys can explain in more
Read more

Younger Parents Need an Estate Plan

It is critical for younger parents to have an estate plan, even if they know they are healthy and do not anticipate that anything will happen in the near future. Much too often, younger parents assume that they can wait until they are older to consider estate planning or until there is a health-related reason to begin the estate planning process. Yet estate planning is critically important for parents who have minor children. While estate planning is important for adults of all ages, it can allow parents to make important decisions about who will care for their children in the event that they become unable to do so themselves. Our Oak Park estate planning lawyers can explain in more detail. Naming a Guardian for Your Minor Children in Your Will Most importantly for younger parents, making a will allows you to name a guardian who can care for your child in the event of your unexpected death. Nobody anticipates a deadly accident or a sudden situation in which there is a need for another
Read more