There are myths of people engaging in serial bankruptcies and sometimes people file consecutive bankruptcies, but one thing debtors should not do is file concurrent bankruptcies. The overlapping cases can create needless headaches for everyone involved, especially debtors.
The biggest reason not to do this is that it might end up creating a second bankruptcy estate that contains debts that are about to be discharged in the first case. Debtors are required to list all their debts in the bankruptcy schedules, and if they do so properly, then it will certainly cause confusion for creditors, who believe their debts will be resolved by discharge or disbursement from the estate. If the debtor lists in the bankruptcy schedules only the debts that are expected to survive the first filing, then the debtor has misrepresented his or her debts.
It’s possible, though, that debtors might be tempted to start on a second bankruptcy between, say, the time of a discharge and when the case is closed. This too is a bad idea. For one, in most cases the time period is fairly short, so there’s no benefit to going about the effort. In other cases, the trustee might be trying to recover property that was sold as a preference, in which case we’re back to the problems specified above: multiple estates, needless headaches.
Then, of course, there are the questions of whether a debtor filing concurrent bankruptcies is abusing the bankruptcy process or engaging in other bad faith shenanigans that would unnecessarily jeopardize the discharge in the first case.
There are compelling strategic reasons to file consecutive bankruptcies. Debtors with an underwater junior mortgage can discharge the loan in chapter 7 and then strip the lien after chapter 13. It’s unlikely, but unlucky debtors might find it necessary to file a chapter 7 case after completing a chapter 13 case either to discharge subsequent debts or benefit from the automatic stay. Finally, some debtors who would prefer to file in chapter 13 to cure mortgage arrearages might be unable to do so because of its high debt limits. In this case, a chapter 7 discharge might lower the debtor’s total debts and then enable the chapter 13 case to take place.
Bankruptcy is a deliberate process that does not benefit from hasty decisions, like filing concurrent cases. If you are experiencing financial difficulties, then talking to an experienced New York bankruptcy lawyer can help you go about that process most effectively.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn NY foreclosure attorneys Bruce Weiner for a free initial consultation.
