Understanding Chapter 20 Bankruptcy

There are a host of bankruptcy codes out there, and some people have heard the term “Chapter 20” bankruptcy.

What is it?

Well, there is no such thing as Chapter 20 in the official bankruptcy code. What “Chapter 20” refers to is the combination of filing for Chapter 7 and receiving a discharge, then later filing for a Chapter 13 to take advantage of the benefits of both types.

Chapter 20 filings were recently limited during the Bankruptcy Reform Act of 2005, which made it less easy to file for successive bankruptcies. The amendments limited the public to filing for Chapter 13 every two years. Also, you cannot file for Chapter 13 unless four years have passed since filing for Chapter 7.

To better understand Chapter 20 filings, it is first important to understand what chapters 7 and 13 are all about.

Chapter 7 seeks to relieve someone from a debilitating amount of debt while liquidating as few of their possessions as possible. This is also called straight bankruptcy. Unsecured debts such as medical expenses and credit cards typically do not have to be paid back.

Chapter 13 is essentially a restructuring of your debt. The consumer works with the bankruptcy trustee on a payment plan, which usually takes place over a 3- to 5-year period. The disadvantage is that you are not immediately relieved of massive debt, but it offers greater protection of your assets.

During a Chapter 20 filing, people file for Chapter 7 to dump their unsecured debt and then file for Chapter 13 to pay off their remaining debt.

Although there are limitations on Chapter 20 filings since the 2005 amendments, securing a 3- to 5-year repayment plan of debts not discharged in the Chapter 7 filing can give a debtor more time to pay off dischargeable debts and avoid collection actions.

If you have bankruptcy questions, it is important to speak with an experienced bankruptcy attorney who can figure out how to best take advantage of bankruptcy laws for you.

O. Reginald (“Reggie”) Osenton is the Owner and President of Osenton Law Offices, P.A. If you need a Brandon bankruptcy lawyer, Tampa bankruptcy lawyer, or Tampa bankruptcy attorney, call 813.654.5777 or visit Brandonlawoffice.com.

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