An individual may file multiple bankruptcies for many reasons. When a discharge of debt is needed, the federal law limits time between discharges. After you receive a discharge in a previous Chapter 7 bankruptcy case, you must wait 8 years before you can receive another Chapter 7 discharge; and 6 years to receive a Chapter 13 discharge.  If you received a discharge in a previous Chapter 13 bankruptcy case, you must wait 4 years before you can receive a Chapter 7 discharge; and 2 years to receive another Chapter 13 discharge. 

The above time periods are measured from the date the previous case was filed.  For instance, if you filed a Chapter 7 bankruptcy on June 1, 2005, then on June 1, 2013 you will be eligible to file a Chapter 7 bankruptcy case and receive a discharge. However, on June 1, 2011 you are eligible to file a Chapter 13 bankruptcy and receive a discharge. 

In some cases a discharge is not needed. A debtor can file a Chapter 13 bankruptcy and repay debts without receiving a discharge. In this situation there is no legal limitation between bankruptcy cases. This strategy is especially useful when faced with non-dischargeable debts that must be fully paid. The obligation is paid over time under the supervision and protection of the bankruptcy court.  In some rare cases of abuse a bankruptcy court will deny the debtor relief. This may occur when a debtor has shown a history of repeated bankruptcy filings that have been dismissed. 

If you have received a discharge and need the protection of the bankruptcy laws for a second time, discuss your situation with an experienced bankruptcy attorney. The bankruptcy laws are meant to help the honest, but unfortunate debtor and can help you straighten out a difficult financial dilemma.

If you want to keep a credit card during your bankruptcy, there are a few things to know.  First, the Bankruptcy Code requires that you list all of your creditors and debts owed on the date of the bankruptcy filing.  Consequently, if a credit card has a zero balance on the date that you file bankruptcy, it does not need to be listed and the credit card company does not receive notice.  

Second, the use of credit during a chapter 13 bankruptcy is prohibited without prior authorization from the trustee and bankruptcy court.  Usually credit approval is contingent upon a written agreement or statement from the credit card company.  Chapter 7 debtors do not have this restriction. 

Third, a payment on a credit card within 90 days before your bankruptcy filing may be considered a preference payment.  The bankruptcy trustee may seek a court order compelling the credit card company to turn over any pre-filing payments.  

Fourth, credit card companies conduct regular checks of their cardholders’ credit and your bankruptcy filing may result in the card issuer closing your account, reducing your credit line, or increasing your interest rate.  These actions may also occur if you choose to reaffirm your debt with the credit card company.  After reaffirming the debt the card may be cancelled and you are stuck with a non-discharged credit card balance. 

Fifth, intentional failure to list a credit card with a balance can result in dismissal of your bankruptcy case.  The bankruptcy court expects you to be entirely truthful concerning who you owe, regardless of your intention to pay the debt. 

Sixth, consider obtaining credit after your bankruptcy discharge.  Many debtors are offered unsecured credit cards shortly after their bankruptcy discharge.  Many creditors consider a recently discharged debtor a good credit risk because the debtor is unable to receive another bankruptcy discharge for several years, and likely has a good debt-to-income ratio.  Many post-discharge credit card offers carry high interest rates and fees, so choose wisely. 

Secured credit cards are another credit option after bankruptcy.  A secured credit card requires a security deposit placed with the credit card company who then issues a credit line secured by the deposit.  Many banks and credit unions offer their customers secured credit cards at reasonable interest rates. 

If you are interested in keeping a credit card during bankruptcy, consult with your bankruptcy attorney.  Your attorney can discuss your options and help you decide on the best way to maintain a credit card account during and after your bankruptcy.

The Co-Debtor Stay is intended to protect the bankruptcy debtor, not the co-debtor.  The Co-Debtor Stay does not eliminate the co-debtor’s legal obligation to pay the debt.  However, the Co-Debtor Stay prevents collection action by the creditor against the co-debtor during the pendency of the Chapter 13 case.  

There are some limitations to the Co-Debtor Stay.  The Co-Debtor Stay is only available in a Chapter 13 case, and does not apply in Chapter 7 or 11 cases.  The Co-Debtor Stay does not prohibit collection action on business debts.  Finally, a joint obligation on a tax debt is generally not considered a consumer debt. 

The Co-Debtor Stay can also be modified or terminated by the bankruptcy court.  A creditor may be successful in terminating the Co-Debtor Stay if your bankruptcy plan proposes to not pay the debt, if the creditor’s interests would be irreparably harmed by continuation of the Co-Debtor Stay, or if the co-debtor received “consideration” for the debt (e.g. you cosigned a car loan for a relative, who actually owns the car). 

If a creditor knowingly violated the Co-Debtor Stay, the bankruptcy court may find the creditor in contempt of court and impose a fine and award damages, including attorney’s fees.  Any collection action taken by a creditor in violation of the Co-Debtor Stay is void. 

If you have joint debts and are considering bankruptcy, speak to an experienced attorney and discover the benefits and protections of a Chapter 13 bankruptcy.  A Chapter 13 bankruptcy case can stop collection action against you and your co-debtors, and give you time to repay or eliminate your debts.  An experienced bankruptcy attorney can help you analyze your financial situation and choose the best strategy for resolving your debt problems.

Your Chapter 13 plan filed with the bankruptcy court will propose to pay the mortgage company a certain amount of money each month to catch up on your past due payments. These payments are sent to your court appointed trustee who forwards them on to your mortgage company.

Of course, you must also be able to begin making your normal monthly mortgage payment in addition to a payment to the bankruptcy trustee. The advantage of filing a Chapter 13 is that you are given five years to catch up your past due payments at zero percent interest. On the other hand, mortgage companies usually require the past due amount paid in a lump sum payment in order to stop the foreclosure unless you are able to complete a loan modification.

If you do not have the ability to save your home from foreclosure, you may need to consider a Chapter 7 bankruptcy to protect you from garnishment if the mortgage company ends up with a deficiency judgment against you. This would occur if your house sells for less than what you owed on it.

This type of budget scrutiny by the court begs the question of whether it is worth it to have both adults in a household working outside the home creating a higher income that disqualifies them for Chapter 7 immediate relief.  Rather, these hardworking couples can either deal with their creditors on their own or file a Chapter 13 plan to repay their debts.  Unfortunately, if the couple elects to file a Chapter 13 and actually pay their creditors something, they may be subjected to the budget constraints set by the court for five years.  It seems that the families who are trying to do the right thing by having both adults work are being punished unfairly by having to submit to a bare-bones budget in order to pay back more of their debt in a Chapter 13.  I wonder if the family who chooses to create less income and have one parent stay home with the kids got it right – the opportunity to be a more involved parent, the opportunity to live with whatever budget they can afford, and the opportunity to pay no debt back through Chapter 7 relief.

If you don’t want to lose your nonexempt property, you may want to consider filing a Chapter 13 which is a repayment plan that proposes to pay back some, but not necessarily all of your debt including your credit cards and medical bills. The amount you have to pay back depends on the amount and type of debt that you have, how much property you have, and how much money you make.

If you are looking for a way to save your home from foreclosure, then filing a Chapter 13 Bankruptcy may be the solution. You can immediately stop the foreclosure process by filing a Chapter 13 Plan that allows you to cure your home mortgage arrearages over five years.

Analysis of the law: When a debtor files bankruptcy, federal law governs the case.  State law can also be intertwined in federal bankruptcy cases.  With regard to the collectability of debts, if a creditor cannot pursue a collection action in state court, then the creditor is barred from pursuing collection in the bankruptcy court.  The creditor does not get a second bite at the apple if the debt cannot be pursued in state court in lieu of the debtor filing for bankruptcy.  The disallowance of the claim is not automatic; the debtor must raise the objection to the claim or it may otherwise be allowed and paid along with other unsecured creditors in a Chapter 13 case.

Outcome: XYZ’s claim was disallowed and the claim was withdrawn.  Here the debtor made the last payment on the account in 1991 and XYZ never filed a lawsuit for the debt owed.  The debtor filed 17 years later.  Kentucky law requires a creditor who is owed repayment on a debt incurred under a credit card arrangement by a debtor to bring legal action within 15 years.  KRS 413.090.