Chapter 20 Bankruptcy Explained by Chapter Bankruptcy Law Attorney

Many people have never heard of a Chapter 20 Bankruptcy. Chapter 7, and Chapter 13, yes — these are popular bankruptcy filings in Arizona. Chapter 20 bankruptcy isn’t actually one of the legal chapters in the bankruptcy code, but it may be something to consider if you have recently filed for Chapter 7.
chapter 20 bankruptcyWhat exactly is this chapter all about, if it doesn’t legally exist? Imagine you file for Chapter 7 bankruptcy, then have an emergency — an emergency resulting in thousands of dollars of debt —that is unexpected. It is not possible to file another Chapter 7 bankruptcy within 8 years. The bankruptcy law states a person may not file Chapter 7 more than one time within 8 years. There is an option, however, of getting a discharge under Chapter 13 IF it has been at least 3 years since filing Chapter 7.
This is commonly referred to as “Chapter 20”.  (Chapter 7 + Chapter 13 = Chapter 20).
Chapter 20 bankruptcy can be a strategic financial plan for debt relief. A chapter 7 allows for the elimination of debt, and the Chapter 13 provides an affordable repayment plan on remaining debt. For example, if a person is behind on the mortgage, has significant non-dischargeable debt (such as tax debt) and has $25,000 in unsecured debt, one option is to file Chapter 7 to wipe out the unsecured debt, then file a Chapter 13 immediately to devise and structure a repayment plan for any debt that cannot be discharged with the Chapter 7.
Do you qualify for a Chapter 20? If you would like to know if a “Chapter 20” could benefit your debt situation, contact our experienced Arizona bankruptcy attorney at Chapter Bankruptcy Lawyers.