Chapter 20
Combined Chapter 7 and 13 Approach
Chapter 20 bankruptcy isn't an official bankruptcy chapter but rather a strategic combination of Chapter 7 and Chapter 13 filings (7 + 13 = 20). This approach first eliminates eligible unsecured debts through Chapter 7, then uses Chapter 13 to restructure remaining secured debts into a manageable payment plan. This strategy can be particularly effective for handling complex debt situations, including removing certain liens and managing secured debt payments while maximizing debt discharge. However, timing restrictions and judicial scrutiny make proper planning crucial.
Pros
- Eliminate unsecured debts through Chapter 7
- Restructure remaining secured debts
- Potential lien stripping opportunities
- Address both secured and unsecured debts
- May save home from foreclosure
- Can remove liens not discharged in prior bankruptcy
- Comprehensive debt solution
Cons
- 4-year waiting period between filings
- More complex and expensive
- Increased judicial scrutiny
- Extended time commitment
- Must prove good faith
- Higher attorney fees
- Multiple filing requirements
Qualifications
Must qualify for and complete Chapter 7 bankruptcy through means test and other requirements.
Must wait 4 years after Chapter 7 filing before filing Chapter 13.
Must demonstrate legitimate need and good faith in pursuing sequential filings.
Must have sufficient regular income to fund Chapter 13 plan after Chapter 7 discharge.
The Process
- 1Complete Chapter 7 Filing and Discharge
- 2Wait Required Time Period
- 3File Chapter 13 Petition
- 4Develop Repayment Plan
- 5Complete Chapter 13 Process
- 6Receive Final Discharge
Timeline
4-9 Years Total
