CHAPTER 20

What is it?

Chapter “20” is actually a combination of a Chapter 7 and a Chapter 13, generally meaning a Chapter 7 followed by a Chapter 13. The Chapter 7 is used first to discharge the unsecured debts (credit card bills, many personal loans, and medical bills) and the personal liability on the secured debts, such as your mortgage or car loans. Generally this only leaves liens on the property. The Chapter 13 is then filed to manage the liens that remain after the Chapter 7. In some instances a second or junior lien may be stripped, a vehicle loan may be “crammed down” to the market value of the vehicle, the interest rate may be lowered on the vehicle, or other, nondischargeable debts may be eliminated.

Can I really get a second discharge of my debt?

A discharge may not be available if the Chapter 13 is filed too soon after the Chapter7, however, a discharge may not be necessary. Generally, you may use the Chapter 13 powers, such as being able to cure arrearages (past due amounts you owe) over the life of the plan and lien stripping (totally removing a second of third lien on the property), despite the inability to get the debt discharged. The ability to create a five year repayment plan that your creditors must abide by may by itself may be worth filing the Chapter 13.