How Soon After my Chapter 7 Discharge Can I File a Chapter 13?

Getting your ducks in a row by filing for and successfully completing a chapter 7 bankruptcy case may only end up organizing half of your ducks. In other words, if you recently received a chapter 7 discharge and still have too many nondischargeable debts, what are your options? After all, bankruptcy law states that a debtor who receives a chapter 7 discharge cannot file another chapter 7 for at least eight years. Filing for chapter 13 in search of another discharge isn’t an option for at least four years after your chapter 7 discharge.

Given that the bankruptcy system in the United States was put into place to help distressed debtors, one would wonder if there is anything left to do should you find yourself just out of a chapter 7 bankruptcy only to discover that it simply didn’t help as much as you thought it would.

Luckily, the US bankruptcy system does have a plan for chapter 7 debtors who find that they are still saddled with too much debt at the end of their case. Sometimes, chapter 7 debtors also mistakenly jump into new debt immediately after their discharge because they think that their money problems have been “solved.” An example of this is the debtor who received a discharge and went right out and bought a car she couldn’t really afford. Her credit had been damaged due to the bankruptcy, so she was forced to accept an extremely high interest rate on her auto loan.

If, after a month of paying bills post chapter 7 discharge, you fall short financially, it is easy to panic. You have most likely been told by your attorney that you cannot file for another bankruptcy until the legal timelines have passed. So: WHAT ARE YOU SUPPOSED TO DO?

Even though you can’t file for a chapter 13 bankruptcy with the intention of receiving another discharge for four years after your chapter 7 discharge, you CAN file a chapter 13 after your chapter 7 if your intent is to reorganize your remaining debt so that it is manageable. This likely will not reduce the total amount of your remaining debt significantly, but it may reduce it slightly, and your attorney can help you negotiate the payment terms on your remaining debt.

If you have creditors who are threatening to garnish your wages (take money directly out of your paycheck) because you can’t afford to repay all of your remaining debts, filing for a chapter 13 will give you the benefit of another Automatic Stay. This prevents any of your creditors or lenders from setting up wage garnishment, repossessing your vehicle or other property, or foreclosing on your home.

A chapter 13 after a chapter 7 is sometimes referred to as a chapter 20, because essentially the two bankruptcies are working together to help you both discharge the debts that can be wiped out and reorganize those that are remaining so that you can really, truly begin again. If you’ve been through a chapter 7 discharge and are still struggling, ask your NJ bankruptcy attorney about a chapter 13 after chapter 7, or a “chapter 20.”

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