“W” Is For When Can You File Bankruptcy Again

For a lot of debtors, there is only one thing worse than filing for bankruptcy and that is having to file again. But it happens. While there are urban myths of the serial bankruptcy filer, I have not encountered one yet. My clients really don’t want to be in my office let alone coming back to see me years later and file for bankruptcy again. I have had clients fall on hard times, file for bankruptcy, rebuild their credit, only to lose their job years later and have to start over.

While there is no limit on the number of times or how frequently you can file, if there isn’t enough time in between filings, the debtor will not get a discharge. And discharge of the debt is really the goal of course. A common example is the debtor who files for Chapter 7 but, a few years later, he falls behind in his house payments. A Chapter 13 will allow him to save his house and force the bank to take a repayment plan even if it doesn’t allow for a discharge of any new debt incurred after the prior Chapter 7.

So here is your handy-dandy cheat sheet of how much time has to pass between bankruptcy filings in order to get a discharge:

  • 8 years between Chapter 7s.
  • 2 years between Chapter 13s.
  • 4 years between a Chapter 7 and a Chapter 13.
  • 6 years between a Chapter 13 and a Chapter 7 (if you repaid under 70% of your unsecured debt).

The time begins running from the date of filing not the date of the discharge.

Keep in mind that there is a big difference between a “discharge” and a “dismissal.” A discharge gets rid of your debt. A dismissal gets rid of your case and your debt is not discharged.

“W” also stands for:

photo by: takomabibelot

“U” Is For Unlisted Assets In Bankruptcy

Properly listing your assets in bankruptcy is critical.  A debtor’s failure to disclose or significantly undervalue assets in the bankruptcy Petition and Schedules can have serious consequences. Courts have consistently held that debtors have an absolute duty to report whatever interest they have in property even if they believe their assets are worthless or are unavailable to the bankruptcy estate. At a minimum, a failure to report an asset may mean the filer loses the asset but this isn’t a worst case scenario. In some cases, the court may outright deny a discharge and dismiss the bankruptcy case. If a bankruptcy discharge is denied, the debtor will never be allowed to file again and discharge the listed debts.

Here are some real life examples of failures to properly list assets and the consequences.

  • A debtor failed to list a potential lawsuit. The debtor lost the cause of action and was unable to sue after the bankruptcy.
  • A Chapter 7 petitioner didn’t report an insurance claim he had against his insurance company.  He lost the right to collect the insurance proceeds.
  • The debtor didn’t list assets and, consequently, didn’t exempt them. The non-exempt assets were turned over to the trustee.
  • A bankruptcy filer didn’t list money owed to him by corporations that he owned. The debtor’s case was dismissed and he was denied a discharge.
  • Where a Chapter 13 debtor failed to properly explain why he had $72,000 deposited into his bank account eight days after filing for bankruptcy, a discharge was denied.
  • A debtor undervalued his interest in a corporation and the court found that he purposefully hid assets. The case was dismissed and a discharge was denied.
  • A petitioner failed to list significant assets in his bankruptcy petition. The debtor sought to dismiss the case. The court denied his request to dismiss the case and ordered the seizure of the undisclosed assets for liquidation and distribution to his creditors.

As you can see, there are serious consequences for concealing, undervaluing or failing to list assets. In an absolute worst case scenario, a debtor can be prosecuted for bankruptcy fraud and, if convicted, may face fines and prison. When you disclose your assets to your attorney, think as expansively as possible about all property rights you may have. If your grandma put your name on her house to avoid probate, then you have an interest in real estate that must be disclosed. Just because you don’t feel like you own it, if your name is on the deed, you do. If your assets don’t make you a good candidate for bankruptcy, then don’t file. But when in doubt, disclose, disclose, disclose.

“U” also stands for:

Chris McAvoy is a Taylor, Michigan attorney and consumer bankruptcy lawyer who helps people file Chapter 7 and Chapter 13 Bankruptcy. To find out more about bankruptcy, click here for contact info. We help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, and the Downriver, Michigan area.

photo by: takomabibelot

“O” Is For Objections By Creditor

o48A creditor has a very small window of opportunity to object to the discharge of a debt in bankruptcy. When the bankruptcy case is filed, a notice is sent out which has the deadline date for a creditor or trustee to object to the discharge. In a Chapter 7, a creditor may file an objection to that creditor’s debt being discharged. In order to object, the creditor must file a complaint to determine the dischargeability of a debt. This complaint is called an adversary proceeding.

The court may deny a chapter 7 discharge for any of the reasons described in section 727(a) of the Bankruptcy Code, for things such as the debtor’s failure to provide requested tax documents; failure to complete a course on personal financial management; transfer or concealment of property with intent to hinder, delay, or defraud creditors; destruction or concealment of books or records; perjury or fraud; failure to account for the loss of assets;  or filing a bankruptcy petition to soon after a previous filing.

A creditor may also ask for a debt to be excepted from discharge under section 523 of the Bankruptcy Code for things such as fraud; incurring debt with the intention of not paying it back and discharging it in bankruptcy, fraud while acting in a fiduciary capacity, embezzlement, or larceny; or for willful and malicious injury by the debtor to another entity or to the property of another entity.

There is a significant difference between an objection to discharge versus the dischargeability of a debt. An objection to a discharge, if sustained, kicks the debtor out of bankruptcy and the debtor will not get a discharge of his listed debts. Ever. The debtor remains personally liable for all debt. An objection to the discharchability of a debt, if sustained, only relates to a single creditor’s debt, not all of the debts.

It sounds like a lot can go wrong but in reality very few creditors file objections. What is even better, the creditor has a very limited time to file these objections. If they fail to do so, any objection is barred forever.

“O” also stands for:

Chris McAvoy is a Taylor,  Michigan attorney and consumer bankruptcy lawyer who helps people file Chapter 7 and Chapter 13 Bankruptcy. To find out more about bankruptcy, click here for contact info. We help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, and the Downriver, Michigan area.

Creative Commons License photo credit: TooFarNorth