Chapter 13 cases last 3 to 5 years. A lot can happen in that time. In some cases, a debtor may need additional bankruptcy relief. This article will address some of the rules of filing a second Chapter 13 case after receiving a Chapter 13 discharge.
Eligibility for Chapter 13 discharge
The law restricts the availability of a Chapter 13 discharge if the debtor received a Chapter 13 discharge in a previous case. Section 1328 of the Bankruptcy Code states that a court may not grant a Chapter 13 discharge to a debtor who has received a Chapter 13 discharge in a case filed under chapter 13 of this title during the 2-year period preceding the date of such order.
The time period described in Section 1328 is measured between filing dates, not discharge dates. To illustrate, suppose a debtor files her first Chapter 13 case on January 3, 2013, and she receives a Chapter 13 discharge. She is eligible to file a second Chapter 13 case and receive a discharge on January 3, 2015.
It does not matter under what chapter the original case was filed. For instance, if a case was filed as a Chapter 7 on January 3, 2013, converted to Chapter 13, and discharged, the debtor is still eligible to receive a second discharge on January 3, 2015 (2 years after the filing date). This is because the original case commencement date did not change, even though the debtor converted to another bankruptcy chapter.
Note that Chapter 13 cases generally last between three and five years, meaning that a debtor could hypothetically receive a Chapter 13 discharge, then immediately file a second Chapter 13 case that is also eligible for discharge.
Eligibility to be a Chapter 13 debtor
The time limit contained in Section 1328 is not a statute of limitations and does not disqualify the individual from filing Chapter 13 bankruptcy. There is no general limit to the number of times or frequency an individual may file Chapter 13 bankruptcy. That said, a debtor is ineligible to be a bankruptcy debtor for 180 days after the Chapter 13 case closes if it was dismissed:
- by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case; or
- after the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay.
See 11 U.S.C. § 109(g).
Applicability of the Automatic Stay
The Bankruptcy Code also limits the reach of the automatic stay in a case filed after a Chapter 13 discharge. The automatic stay is effective for only 30 days if you had a bankruptcy case pending within 365 days of the case filing. See 11 U.S.C. §§ 362(c)(3) and (4). The bankruptcy court may extend the automatic stay if your case is filed “in good faith” and you are not abusing the bankruptcy system. Even if the automatic stay is terminated, most courts find that the property of the bankruptcy estate is still protected from creditors. That may include your house or your vehicles. Additionally, garnishments of post-bankruptcy wages are generally protected in a Chapter 13 case.