So you ask, “How many times can someone receive Chapter 13 bankruptcy?” Could that happen twice in their lifetime?
If you successfully obtain a discharge in a Chapter 13, you are not eligible for a discharge for two years. You must keep in mind you’ve been in bankruptcy for either 3 to 5 years and you have paid back some of your creditors, so where there is actually a two-year bar to refiling a new bankruptcy, that assumes you got a discharge to the old one. A lot of people like our process, but if they screw something up, their case gets dismissed and they have to re-file – or they miss plan payments, causing their case to get dismissed and then they have to re-file.
If you get rid of a credit card, you may get rid of the “Let me just swipe this and I can buy that fancy thing” mentality, and you actually have to pay cash. We find that people are much less willing to part with cash than they are willing to swipe that credit card; it just makes people more conscious of what they are buying and how much they are paying. When you get to the end of that grocery line and you know that $150-odd grocery bill comes up and you have to pay that $150 with cash and you know that money is coming out of the bank account, you may rethink some of those non-essential purchases versus just handing somebody your credit card. You have an immediate concern rather than to worry about it next month. We have found that sometimes it can be a good thing when people say “I can’t have my credit frozen for that long,” but then they choose to do it anyhow.
Some people say “Oh, no”. You know I need a credit card
Now, you can use debit cards, with which you have to be careful, because the debit card is attached to your bank account and that money is coming out of a bank account. So that money does have to be there. Sometimes, the Chapter 13 can be a way for an individual who has never budgeted to actually budget and keep a good watch on their money. Because sometimes, the individual does not have a money gram, and they do make enough money, but they don’t know where their money is going because they’re not tracking it, a debit card can be of help in keeping track of their spending.
So what are some items of misinformation that you have to dispel from time to time with the people that have concerns with credit issues? Some people, for example may believe that they will not be able to buy a house again, or something along those lines. What would I tell that individual?
Well, frankly, it all depends at what stage that individual is. If an individual is losing his or her home to foreclosure, they don’t need to worry about buying a home; they need to worry about saving the home they have. One of the downsides to Chapter 13 is that you will be in the bankruptcy for 5 years. And while you are in the bankruptcy, your credit is frozen. You cannot borrow money, and to some people, that is a relief. Some people look at and they say “that’s how I got into this mess in the first place–borrowing money.”
Look to us for guidance in this. We would like to help.