Chapter 13 cases can run up to five years. During that five year period it is very common for a debtor to experience a financial setback (e.g. job loss, health problems, vehicle repairs, domestic problems etc.) and be unable to make timely plan payments. Failure to make timely Chapter 13 payments will lead the Chapter 13 Trustee to file a Motion to Dismiss. There are many ways to respond to a Motion to Dismiss, including but not limited to, curing the delinquency over time, modifying the Chapter 13 plan, converting the case to Chapter 7 or allowing dismissal. If the case is dismissed, the debtor may elect to file another case. Refiling may be a very appropriate option, but here are some of the limitations to be mindful of:
1. The debtor will be ineligible to refile for 180 days if:
a. The debtor voluntarily dismissed the prior case after a Motion for Relief was filed;
b. The prior case was dismissed with prejudice; or
c. The prior case was dismissed for failure to appear in proper prosecution.
2. If a prior case has been pending in the 365 days prior to filing, the automatic stay triggered by the filing may be more limited if not extended by the Bankruptcy Court within 30 days of the filing.
3. If two prior cases were pending in the 365 days prior to filing, then the stay may not be automatic, but can be imposed by the Bankruptcy Court if requested.
4. The various entities reviewing the case (Bankruptcy Judge, Bankruptcy Trustee and creditors) may look for an explanation as to why the new case will be successful whereas the prior case was not.
5. If a new case is filed, then the entire filing and confirmation process will have to be repeated.
6. In some instances the bankruptcy court in the prior case may have granted “in rem” relief with regards to a certain item of collateral and a new filing will not protect the asset.
Sasser Law Firm welcomes refile cases.