Can I File for Chapter 13 If My Chapter 7 Is Dismissed?
- A debtor can file a new Chapter 13 case as soon as he wants, unless the Chapter 7 dismissal was due to the debtor willfully disobeying court orders. If the bankruptcy court determines the debtor was in willful violation of court orders, the debtor must wait at least 180 days before he can file the Chapter 13 case, according to 11 U.S.C. §109(g). The debtor should consult with his bankruptcy attorney to confirm if section 109(g) is applicable to his situation and find out how soon the new Chapter 13 case can be filed. Figuring out the appropriate time to file the new case is important because creditors can start demanding payments and proceed with foreclosure or repossession actions if the debtor is not under the protection of the bankruptcy.
- A Chapter 13 debtor cannot have more than $360,475 in unsecured debts and cannot have more than $1,081,400 in secured debts by the time the case is filed. The Chapter 13 debt limits listed in Title 11 U.S.C. §109(e) of the Bankruptcy Code were updated as of April 1, 2010. The debt limits are updated every three years to reflect changes in inflation and cost of living expenses. Unsecured debts consist of credit card debts, medical bills, student loans and any other type of debt that is not attached to a debtor's real or personal property. Secured debts include loans and debts in which the debtor's property is used as collateral. Mortgages and car loans are common types of secured debts.
- Chapter 7 and Chapter 13 debtors are required to complete credit counseling within 180 days before their cases are filed, according to 11 U.S.C. §109(h). Credit counseling gives the debtor an opportunity to carefully review his budget and find out about other debt resolution alternatives. The Department of Justice U.S. Trustee Program website offers a list of court-approved credit counseling agencies the debtor can use. Even though the debtor previously completed credit counseling for the Chapter 7 case, he needs to complete the credit counseling again for the Chapter 13 case.
- The debtor and debtor's attorney must create a Chapter 13 payment plan and file it with the bankruptcy court. The Chapter 13 plan must comply with 11 U.S.C. §1322 in order for it to be approved by the bankruptcy court. The debtor needs to make an income that can sufficiently cover all of the payments he is required to make during the bankruptcy. Debtors have to continue making loan payments for any secured debts if they want to keep the property. The Bankruptcy Code also requires debtors to pay unsecured priority debts such as alimony and child support, if applicable. The debtor's income can be from employment, Social Security benefits, disability benefits or other sources. Failure to complete the approved payment plan can lead to the bankruptcy case being dismissed.
