Many people going through the bankruptcy process find themselves confused by the myriad different chapters of the bankruptcy code: 7, 9, 11, 12, 13, and 15. To the uninitiated, this can seem incredibly obtuse. Each chapter represents a different type of bankruptcy protection, offering different benefits to those who file in it.
You may have noticed that nowhere in this list was "Chapter 20." You may have heard of this chapter and wondered where it fits into the US bankruptcy code. Chapter 20 is actually not a real chapter, but rather a portmanteau of sorts, combining Ch. 7 and Ch. 13 to take advantage of protections and benefits offered by each.
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How Does "Ch. 20" Work?
Under this form of bankruptcy, a person files for Chapter 7 in order to divest himself of unsecured debts. Under Chapter 7, the filer is allowed to keep certain exempt property, while the rest is sold off to pay back debtors. This allows these debts to be forgiven.
Following the Chapter 7 filing, the person then files for Chapter 13. This form of bankruptcy allows for the restructuring of debts, and requires a steady income in order to slowly pay off the debts. The courts grant you a set time period over which to repay your debts. The Chapter 13 filing allows the filer to begin paying of mortgage payments, in order to avoid foreclosure on your house.
Why Opt for 20?
Filing for two different types of bankruptcy allows you to more completely divest yourself of your debts. You can take advantage of an automatic stay, which prevents your creditors from taking certain debt-collection actions against you while the bankruptcy itself is pending. This can further protect you from creditors attempting to reclaim their loans.
It's important to make sure that you discuss your case with a bankruptcy attorney in your area, as this will affect your ability to file Chapter 7 or Chapter 13 in a particular order. Under the current code, you cannot file for Chapter 13 if you've filed for it in the last two years. Some jurisdictions will allow you to file more frequently if your Chapter 7 petition is pending. Unfortunately, some will not.
If you have any other questions about bankruptcy law, visit the website of the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office.
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