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Chapter 20 is an informal name of a unique situation in which a debtor gets the unsecured debts to discharge in a Chapter 7 bankruptcy and then files for Chapter 13 (7+13=20) to deal with the issues of other debts.
According to 11 U.S.C. 1328 (f)(1), a debtor, who has received a discharge in Chapter 7 case in the last four years, will not get a discharge in Chapter 13 case. However, if the Chapter 13 case is likely to last at least for the next four years, the debtor can file for Chapter 13 a day after receiving a discharge in Chapter 7, since it is received at the end of a case.
A debtor must pass the Means Test to qualify for Chapter 7, and must have secured debts of less than $250,000 and unsecured debts of less than $750,000 to qualify for a Chapter 13. If the debts exceed the Chapter 13 limits, but they earn enough money to pass the Means Test for Chapter 7, the debtor is often forced to file a Chapter 11 bankruptcy which is far more expensive.
The citizens of Florida have a unique opportunity of retaining the homestead even after filing a Chapter 7 bankruptcy to get the secured/unsecured debts discharged. After this, the debtor uses lien stripping in a Chapter 13 case to get rid of the second mortgage. Thus, the debtor will only have to pay the first mortgage to keep the house and will be able to save tens of thousands of dollars.
In order to know more about the effects of bankruptcy on your home mortgages, contact the Recovery Law Group, best in Los Angeles & Dallas, TX, at www.staging.recoverylawgroup.com or call on 888-297-6203.