Think about these special considerations if you filed bankruptcy before your divorce and now need to think about filing another one.
In the last blog post we introduced three very practical considerations about filing bankruptcy again if you and your ex-spouse filed a bankruptcy in the past before your divorce. We now look at these three more closely.
1) Were You Definitely a Debtor In the Earlier Bankruptcy Case?
If your ex-spouse filed that earlier bankruptcy without you, then you can now file bankruptcy whenever you want. The delay-in-filing-again rules don’t apply to you.
So could you possibly have thought that were on that prior bankruptcy case with your ex-spouse, but you really weren’t?
Consider all the financial and other huge stresses at the time of your prior bankruptcy filing. It wouldn’t be that surprising if a few years later you wouldn’t remember exactly what happened. The two of you might have gone to the initial meeting together but only your ex-spouse followed through. Maybe you ended up not signing the documents. Or maybe you both signed the documents but then for some reason only your ex-spouse was included in the filing. Maybe your ex-spouse was the person who needed the bankruptcy and so you were dropped.
Not remembering who actually filed bankruptcy would apply all the more so in a marriage that later ended in divorce. At the time of that earlier bankruptcy you may not have been communicating well with your then-spouse. He or she may have even intentionally misled you.
So, find if you really were a debtor in the earlier case. Talk with your current bankruptcy lawyer about this at the beginning of your initial consultation with him or her.
2) Was a Discharge Granted in that Earlier Bankruptcy Case?
Even if you were definitely a debtor in that earlier case, these timing rules only apply if that case—whether a Chapter 7 or Chapter 13—resulted in a successful discharge (legal write-off) of your debts at the completion of that case. If there was no discharge, then you could file a new bankruptcy case as soon as you want.
So you need to make sure that the previously filed bankruptcy case did indeed result in a discharge.
Most likely there was a discharge of debts if you remember that the case was completed successfully. At the end of your case you should have received an order from the bankruptcy court granting the discharge. This would be about 3-4 months after filing under Chapter 7, or 3 to 5 years after filing under Chapter 13.
But it’s not that unusual to think you had completed a case successfully when actually there was no discharge
Chapter 7 “straight bankruptcy” cases have a relatively high success ratio. Nevertheless, just one even minor-seeming slip-up could result in a case getting “dismissed”—thrown out—instead of “discharged.” You might not realize this because you didn’t read the document carefully enough. Or you didn’t read it at all because you thought your spouse did.
Chapter 13 “adjustment of debts” often don’t make it all the way to completion and discharge. Just because a Chapter 13 case has lasted for years, it can still very easily be “dismissed” instead of “discharged.” Your ex-spouse may not have understood, or may not have bothered to tell you.
So, if you still have your old bankruptcy documents, see if you can find the discharge order. Bring it and whatever other papers you have to your initial consultation meeting with your current bankruptcy lawyer. Even if you don’t have any such documents, your lawyer can likely still find out whether you got a discharge.
3) Do You Definitely Need A “Discharge” in a New Bankruptcy Case?
Even if you did file that prior case with your ex-spouse, AND a discharge was definitely entered, you may STILL want to consider whether to file a Chapter 13 “adjustment of debts” case now, even if the applicable time period has not yet expired,.
You can’t do so, you figure, because the time had not yet expired! Well, you actually CAN file a new bankruptcy case at any time. You just can’t get a discharge of debts in that new case.
But why would you file a bankruptcy case knowing that it would not result in a discharge of debts? Isn’t that the reason for filing bankruptcy?
Usually, but not always.
True, the discharge of debts is usually the main benefit of a Chapter 7 “straight bankruptcy”.
However, a Chapter 13 case can provide benefits that sometimes can be more important than the discharge of debts. In fact, sometimes there aren’t even any debts that need to be discharged—especially if the earlier bankruptcy was completed not so long ago and the debts discharged then. Instead, the primary reason you would seriously consider filing a Chapter 13 case is if you owe some special debts—usually ones that you can’t or don’t want to discharge—and you need help with them.
Chapter 13 can usually buy you very valuable time to pay debts that you can’t or don’t want to discharge. You get time to pay them, and protection from your creditors in the meantime.
These special debts included debts secured by collateral you want to keep, such as home mortgages and property taxes, and other liens on your home, and vehicle loans. Other such debts are income taxes and child/spousal support.
Chapter 13 gives you a lot of power over these tough debts, even without the usual discharge of debts. So it may not matter when you filed your prior case with your ex-spouse. Even if you can’t file a new case yet and get a new discharge, you may benefit from filing a Chapter 13 case now without getting a discharge of debts from it.