You may lose some other benefits of the plan, for instance, the low interest rate on the car or paying back the tax liability, The tax liability will still be there after you get the discharge in the chapter 7 but it will take care of your unsecured debt and you will get some benefit from having gotten a discharge in bankruptcy. I mean most people don’t do multiple Chapter 13 with discharges because, they have solved their financial problem. But if somebody keeps getting a case dismissed and they re-file, there may be some level of fraud involved. The judge can bar you from re-filing if he feels that there is fraudulent activity going on.
That happens more often than you would think. There are a lot of low profilers who frankly got out of the Chapter 13 for whatever reason. Chapter 13 is very difficult under the ideal circumstances to make it all the way through to discharge, because your financial situation basically has to remain stable for five years. And some times, that just doesn’t happen, as people lose jobs and credentials go up, I mean gas is always going up, isn’t it? You know things just happen that people can’t control. But there is a way to convert the case from a Chapter 13 to Chapter 7, if you find that you just cannot make the plan payment, (I actually had a conversation with a client today about this) then you can convert the Chapter 13 to Chapter 7 to get a discharge but it will be a Chapter 7 discharge.
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.