screwed by the Bankruptcy law reform of Oct. 2005!!!!

[shellbell]

you know I never complain about anything, but now I feel like I am still being penalized for filing bankruptcy. I filed a 7 back in 2005 that was discharged in 2006. Three mths later (Aug 2006) I had to filed a 13 for mortgage arrears and IRS taxes. Lo and behold, its 2012 and I have paid 60 mths of a 13, my case is completed and closed. My car died and I had to try for a used one. Well, I am Soooooo disappointed. No one will give me a loan because my Chapter 13 CAN NOT be discharged. Doesn't matter that I completed it and my 7 releases me from any debts, and I had none during my 13. I am screwed and have to wait until it drops off my credit report. I'm sorry everyone. I just had to vent. Thanks for listening.

[Flamingo]

The problem is not your Chapter 13, it's your Chapter 7 (well, really you probably have two showing which really makes you a bad credit risk)....a Chapter 7 stays on your credit reports for 10 years from the date of file. Even though you filed a Chapter 13 afterwards, that is only on your record for 7 years from the date of filing. Filing BK, for whatever reason, is one of the 3 worst things on one's credit report - they are bankrtupcy, repossession or foreclosure. The only way around being a credit risk is to again show you are credit worthy and over time do not be late with a payment on anything. It will take time as nothing happens overnight after recovering from filing BK.

[shellbell]

I was told that the banks aren't worried about my credit report, they are worried about my Chapter 13 being opened up again and if they lend me the money, that will pose a problem.

[despritfreya]

I was told that the banks aren't worried about my credit report, they are worried about my Chapter 13 being opened up again and if they lend me the money, that will pose a problem.

If that is what you were told then you need to continue to search for a lender. The reality is that the average lender has no clue what a "Chapter 20" is. All they see is that the potential borrower has filed 2 cases within a relatively short period of time. Flamingo hit the nail on the head. Your inability to obtain financing is more likely a problem of creditworthiness. Many folks do get financing right out of a bk - usually with very, very high interest rates. Many others have to wait until they reestablish credit which does take time. You have two bks on your CR. You probably need to establish credit before you are going to be able to finance a large ticket purchase.

Just my 2 cents.

Des.

[shellbell]

Well, the kicker is that I was able to obtain financing, until they saw that my Chapter 13 case couldn't be discharged.

[keepsmiling]

Well, the kicker is that I was able to obtain financing, until they saw that my Chapter 13 case couldn't be discharged.

I don't get why it can't be discharged?
Sorry if I am having a senior moment.

[shellbell]

Here's the reason:

"The debtor received a discharge in a Chapter 7 or 11 case filed within eight years prior to the filing of a new Chapter 7 case (six years if the new case was filed prior to 10/17/05), or received a discharge in a Chapter 12 or 13 case within six years prior to the filing of a new Chapter 7 case.

If the debtor is not entitled to a discharge because of a discharge entered in a prior case, the Court will typically issue a Notice of Intent Not to Grant a Discharge;

This is my dilemma. Even though I paid all Mortgage arrears/IRS taxes and both car notes back 100% while in my Chapter 13 plan, I am still being penalized.

[keepsmiling]

How does this make any sense?
Essentially one in a state of limbo indefinitely?

[dneil]

Here's the reason:

"The debtor received a discharge in a Chapter 7 or 11 case filed within eight years prior to the filing of a new Chapter 7 case (six years if the new case was filed prior to 10/17/05), or received a discharge in a Chapter 12 or 13 case within six years prior to the filing of a new Chapter 7 case.

If the debtor is not entitled to a discharge because of a discharge entered in a prior case, the Court will typically issue a Notice of Intent Not to Grant a Discharge;

This is my dilemma. Even though I paid all Mortgage arrears/IRS taxes and both car notes back 100% while in my Chapter 13 plan, I am still being penalized.

Where are you getting this information from? Do you have a link in regard to this law? Have you talked with your attorney, and did he state that this would be the case if you opened a chapter 13 after having done a 7? Last question.... what about an instant car credit? Interest is higher, but you can always make extra principle payments. Or.... get into a credit union that is well known for bankruptcy forgiveness, bring in proof of all payments made in chapter 13 along with proof of each payment made on time...and perhaps they will work something for you. I know a few people here in Michigan who were not even discharged from their bankruptcy and were able to secure a loan for a vehicle. I used ally bank..... I hated having to take out a loan within a year of being debt free, but I always always pay extra on my principle amount (8.9% interest OUCH)....
Anyway, I am curious where the bankruptcy law has this and would like to read it.

[shellbell]

I think i will have to wait until it drops off my credit report in 2016.

[shellbell]

This is from the uscourts.gov website regarding Chapter 13 discharge:


The bankruptcy law regarding the scope of the chapter 13 discharge is complex and has recently undergone major changes. Therefore, debtors should consult competent legal counsel prior to filing regarding the scope of the chapter 13 discharge.

A chapter 13 debtor is entitled to a discharge upon completion of all payments under the chapter 13 plan so long as the debtor: (1) certifies (if applicable) that all domestic support obligations that came due prior to making such certification have been paid; (2) has not received a discharge in a prior case filed within a certain time frame (two years for prior chapter 13 cases and four years for prior chapter 7, 11 and 12 cases); and (3) has completed an approved course in financial management (if the U.S. trustee or bankruptcy administrator for the debtor's district has determined that such courses are available to the debtor). 11 U.S.C. § 1328. The court will not enter the discharge, however, until it determines, after notice and a hearing, that there is no reason to believe there is any pending proceeding that might give rise to a limitation on the debtor's homestead exemption. 11 U.S.C. § 1328(h).

The discharge releases the debtor from all debts provided for by the plan or disallowed (under section 502), with limited exceptions. Creditors provided for in full or in part under the chapter 13 plan may no longer initiate or continue any legal or other action against the debtor to collect the discharged obligations.

As a general rule, the discharge releases the debtor from all debts provided for by the plan or disallowed, with the exception of certain debts referenced in 11 U.S.C. § 1328. Debts not discharged in chapter 13 include certain long term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. To the extent that they are not fully paid under the chapter 13 plan, the debtor will still be responsible for these debts after the bankruptcy case has concluded. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for restitution or damages awarded in a civil case for willful or malicious actions by the debtor that cause personal injury or death to a person will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable. 11 U.S.C. §§ 1328, 523(c); Fed. R. Bankr. P. 4007(c).

The discharge in a chapter 13 case is somewhat broader than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property (as opposed to a person), debts incurred to pay nondischargeable tax obligations, and debts arising from property settlements in divorce or separation proceedings. 11 U.S.C. § 1328(a).

[shellbell]

I have spoken with my atty from the beginning and I knew I wasn't going to get a discharge. There is nothing to discharge. I paid my mortgage arrears and regular mortgage while in the plan and have also paid the IRS in full. My cars are also paid in full. This is the only reason why I filed Chapter 13, is to cure Mortgage arrears and wipe out my IRS debt. My case is considered completed and closed and my status is: Discharge unapplicable.

All the sub-prime lenders have turned me down because of one word I don't have on my Status: DISCHARGED.

My last resort is a credit union.

[LadyInTheRed]

How does this make any sense?
Essentially one in a state of limbo indefinitely?

No, one is not in limbo. Even if a debtor is not entitled to a discharge, when they complete the Chap 13 plan, the case is closed.

Originally Posted by shellbell
Here's the reason:

"The debtor received a discharge in a Chapter 7 or 11 case filed within eight years prior to the filing of a new Chapter 7 case (six years if the new case was filed prior to 10/17/05), or received a discharge in a Chapter 12 or 13 case within six years prior to the filing of a new Chapter 7 case.

If the debtor is not entitled to a discharge because of a discharge entered in a prior case, the Court will typically issue a Notice of Intent Not to Grant a Discharge;

This is my dilemma. Even though I paid all Mortgage arrears/IRS taxes and both car notes back 100% while in my Chapter 13 plan, I am still being penalized.

Where are you getting this information from? Do you have a link in regard to this law? ...
Anyway, I am curious where the bankruptcy law has this and would like to read it.

I also wonder where that came from. It is releated to eligibiliity for a Chap 7 discharge, not a Chap 13 discharge. It is true that Shellbell was not elible for a Chap 13 discharge, but the reason she quoted in that post is not correct. The law regarding eligibility for a Chap 13 discharge is 11 USC Sec. 1328. Subparagraph (f) of that section states:

(f) Notwithstanding subsections (a) and (b), the court shall not grant a discharge of all debts provided for in the plan or disallowed under section 502, if the debtor has received a discharge -

(1) in a case filed under chapter 7, 11, or 12 of this title during the 4-year period preceding the date of the order for relief under this chapter, or

(2) in a case filed under chapter 13 of this title during the 2-year period preceding the date of such order.

So, if you are discharged in a Chap 7 filed within 4 years of filing your Chap 13, you cannot get a discharge in the Chap 13.

I think i will have to wait until it drops off my credit report in 2016.

Shellbell, your Chap 13 was only closed on January 6th. Have you checked your credit reports to see if they've been updated to show the case is closed? The creditors may use the term "discharged" because it is boilerplate. It may make a difference if they saw the case is closed.

Also, as already advised, you should work on rebuilding your credit. Try getting a credit card that you can use once a month and pay as soon as you receive the bill. If you are turned down for an unsecured card, apply for a secured card. If you show you can use credit responsibly, you shouldn't have to wait until 2016 to get a car loan.

[dneil]

Okay.. ah ha! Now that makes sense. All is not lost ShellBell. Try to keep a positive attitude and have some patience. Let the bankruptcies work their magic while you work on rebuilding. Your future has hope

[shellbell]

thanks everyone. I am just frustrated. ;)