Many people who have considered filing for Dallas bankruptcy know about the main differences between the two most common types of personal Dallas bankruptcy, Chapter 7 and Chapter 13. There is another fairly common type of Dallas bankruptcy; although it does not have an official chapter number, usually it is referred to by bankruptcy lawyers as a “Chapter 20” bankruptcy. In certain cases, this special process can be extremely beneficial to the individual.
Chapter 20 Explained
“Chapter 20” Dallas bankruptcy is so named because it is a process where a debtor files a Chapter 7 case, then immediately files a Chapter 13 afterwards. According to a bankruptcy lawyer, this combo serves certain debtors very well to help them recover from their debts. Filing Chapter 13 immediately after Chapter 7 can buy some much-needed time to build savings to repay a non-forgivable debt, says the bankruptcy lawyer. For example, if you have a large amount of debt, and one of those sources of debt is a non-dischargeable student loan, you may seek to file Chapter 7 in order to clear the dischargeable debt. Chapter 7 Dallas bankruptcy will free up more of your income to be used to repay the outstanding student loan debt, which can then be organized under Chapter 13 into manageable payments.
The bankruptcy lawyer stresses that Chapter 20 filing will not earn you a second discharge: in order to obtain a discharge in Chapter 13 after a successful Chapter 7, a debtor must wait 4 years before filing. Chapter 20 is a unique tool for curing arrearage that may have amassed on debts such as mortgages and tax debts. Your Dallas bankruptcy lawyer will know best if Chapter 20 Dallas bankruptcy is right for you.