Detroit Files Chapter 9 Bankruptcy

The news coming out of Detroit interesting from a political perspective but it is not particularly relevant for this site.  So might wonder why are we covering it at all?  The answers is that it highlights the complexity of the Bankruptcy code.

Detroit News article

Detroit Files Chapter 9 Bankruptcy.  What the heck is that?

The short answer is its a municipal bankruptcy which are governed by chapter 9 of the US Bankruptcy code.  The other more common examples are Chapter 7 (Liquidation) Chapter 13 (individual reorganization) and Chapter 11 (business reorganization).  The less common ones like chapter 9 also include chapter 12 which is a family farmer reorganization.

There really is no need to go into too much detail about these but we thought that this recent filing was a good time to refresh on the different chapters that are available.  As always more on this topic can be found in the book.  Which you can buy off this site or on Amazon.com

I just noticed on Amazon that they are currently discounting the book.  You can now buy a new copy for less than 14 bucks.  

I have no idea how long this sale will last but it seems like a great time to buy it.  Just click the box above

Multiple Bankruptcies, Or when can I file again?

Hopefully those of you who have filed for Bankruptcy will not find yourself in the position where you need to file a second or third time but unfortunately it does happen and it happens more often than you may think.  Sometimes its a result of poor planning but more often than not its a function of reality.  Bad stuff happens and people with less resources are more likely to be unable to weather the storm.  

Technically speaking there is no minimum time frame between bankruptcies.  However there are limitations regarding the usefulness of filing.  The end goal of most bankruptcies is a discharge of the legal obligation to pay one's debts.  Unfortunately if you file to soon you run the risk of not being able receive the discharge you desire.  

I will summarize the rules here for your benefit but keep in mind that some issues (and this is one of them) are best answered by an Attorney.  The best thing you can do is make sure you hire a good attorney who can look at you individual situation and determine the best course of action for you.  In order to find the right attorney for you it is important that you develop a general understanding of the law so that you can assure you have a knowledgeable attorney in the field.  For more info on this check out my book by clicking here.  Or you can buy it on Amazon.com 

General Guidelines are as follows

Successive Chapter 7 cases need to 8 years apart

Successive Chapter 13 cases need to be at least 2 years apart

It is more complicated if you change Chapters (ie file one of each)

After a 13 in which you recieved a discharge you need to wait at least 6 years to file a 7 unless you either 

1) paid all creditors in full in the 13 or

2) you paid at leas 70% and it was you best efforts and in good faith

If you filed 7 first then you need to wait at least 4 years to file the 13

As I said it can be complicated so check out my Book and get a good attorney.