"Chapter 20" bankruptcy is the unofficial term for when someone files for Chapter 13 bankruptcy right after a Chapter 7 bankruptcy. People may choose this route to financial solvency in cases when Chapter 7 bankruptcy is not enough. If you do not wait four years after you have filed for Chapter 7 bankruptcy to then file for Chapter 13, however, there would be no discharging of debts from the Chapter 13 bankruptcy. That being said, there are still benefits to filing for both, as just one may be insufficient. In order to examine when Chapter 20 would be beneficial, it would be best to first examine the drawbacks and benefits to filing for bankruptcy just once.

For example, if you file for Chapter 7 bankruptcy only, then an unsecured second mortgage could not be stripped. Neither could you keep creditors from collecting the debt that cannot be discharged. With this bankruptcy only lasting a few months, this may not be enough time to catch up on your mortgage payments. What Chapter 7 can do on its own, however, is that your unsecured debt is discharged in only a matter of months, not years. This further means that you are not primarily using your money to pay off debt for the next three to five years; you can move on quickly. You also do not have a debt limit for being eligible for this protection.

What could happen if you just file for Chapter 13 bankruptcy? This could mean that you have the time to pay your mortgage and any arrearage. The years-long automatic stay would keep creditors from collecting your non-dischargeable debt for as long as your bankruptcy takes to finish. And you can strip any unsecured second mortgage you have. However, this also means that it will take three to five years to get any of your debt discharged, and this reorganization plan means that for that amount of time, your income will be primarily centered on paying off debts. There are also debt limits to qualify for Chapter 13.

So what would combining both processes do for you? It can help you if you have too much debt to qualify for Chapter 13 bankruptcy. You could get enough of your debt discharged in Chapter 7 bankruptcy to then turn around and file for Chapter 13, which can enable you to pay off your mortgage or car loan arrearage as well as other debts that cannot be discharged.

Chapter 20 might also free you up to actually pay off your debts. What is meant by that is Chapter 7 can eliminate a great deal of unsecured debt, which would free up additional income to pay off other debt, such as mortgage arrears. With more debt cleared out the way before you file for Chapter 13 bankruptcy, Chapter 13 might become a quicker process than before, and you might be able to attack greater amounts of debt than if you were still weighed down with unsecured debts on top of everything else.

If you need Chapter 7 bankruptcy protection, but you also need to strip an unsecured second mortgage, then you may be able to get both benefits from a Chapter 20 bankruptcy process. Whatever your reasons for looking into Chapter 20, pursuing this option is a big decision, one that you definitely want to consult an expert about first. If you are looking at your options for moving on to a stronger financial future, then do not hesitate to contact an experienced bankruptcy attorney today. Find a legal professional who is committed to providing you the answers and service that you need and deserve.