Some seem to think so.
There’s an ongoing tug of war in the courts between the bankruptcy establishment on one side and debtors and their lawyers on the other about whether a Chapter 13 that pays only the attorneys fees necessary for the bankruptcy is allowed.
Some courts mutter that such a plan is a “disguised Chapter 7” as though Chapter 7 was the default choice and the choice of Chapter 13 needs to be justified. Those courts propose to dismiss or convert cases that in the court’s view would be appropriate Chapter 7 cases.
That view is wrong, for many reasons which I’ll get to in a minute.
But the most compelling reason to choose Chapter 13 is baked into the Bankruptcy Code after Congress “reformed” it in 2005:
Choose Chapter 13 and, if your finances go to hell after you file your case, you can file another, full strength Chapter 13 to deal with new troubles.
File Chapter 7, and you are locked out of a subsequent bankruptcy discharge for four years.
How can anyone other than the debtor make that choice about future risks? Where do judges get a crystal ball that sees into the debtor’s future? [Read more…]