Chapter 13 bankruptcy is complicated. They are difficult cases from the standpoint of debtors, creditors, bankruptcy attorneys and at times the bench. For this reason, things don’t always proceed smoothly the first time through the process. Like anything else, there is a learning curve to doing things. For debtors, the learning curve can be drastic. For example, the debtor needs to commence making timely payments to the chapter 13 trustee as well as to certain creditors in certain cases. Debtors have found this to be difficult in that they were struggling to make payments to creditors prior to filing. In a chapter 13, we are asking the debtor to all of a sudden be perfect.
In some cases, the attorney who handled the original chapter 13 bankruptcy case will be hesitant to file on behalf of the debtor once again. Additionally, the prior counsel may demand more upfront money in order to proceed with a second filing. The bankruptcy attorney may perceive that the second case is going to be just as difficult as the first and that the debtor may continue to fall into bad habits. Another reason why the bankruptcy attorney might demand more money up front is that he or she may not have been paid accordingly in the first case. This all depends upon the monthly payment, the nature and amount of pre-confirmation adequate protection payments paid to creditors and whether or not the debtor is in fact making timely payments.
I have found that second filings of bankruptcy cases under chapter 13 can prove very successful as compared to the first case filing. The debtor is aware of the requirements under the bankruptcy code in terms of documents and payments. The debtor is also aware of the fact that if payments and documents are not provided, then the case will quickly dismiss as in the prior instance. The debtor will remember the fact that he had to pay an additional filing fee, provide specific documents all over again and possibly have to retake the credit counseling session which is required prior to filing. With all of this in mind, the debtor should make a much stronger effort in the second case.
If the debtor files for chapter 13 and had a prior case dismissed within the last year, then the debtor’s attorney must bring a motion to extend the automatic stay as to all creditors. The court will want to know what circumstances have changed that will allow this case to succeed when the prior case failed. If there were two cases dismissed within one year, then there is no stay at the time of filing. The debtor’s attorney will have to bring a motion to impose the automatic stay as to all creditors. These motions oftentimes are objected to by the chapter 13 trustee. Some courts have given the trustee’s opinion way too much weight considering most creditors will not object to stay motions.
The bottom line is this: if you have been involved in a chapter 13 bankruptcy case and are now on the outside looking in, you do have options available to you. If your prior counsel was not responsive, helpful or is demanding too much money to refile, explore other options. I personally believe in giving someone a second chance at filing a chapter 13 bankruptcy case. Each case is different. No two cases are exactly the same. Chapter 13 is all about reorganization which often includes a second bite at the apple.
