Chapter 20 Bankruptcy is when Chapter 7 and Chapter 13 Bankruptcy are filed back to back. This eliminates unsecured debt and then eliminates liens on things like your home.
Once you have filed Chapter 7 Bankruptcy to reduce your overall debt, you immediately file Chapter 13 Bankruptcy to give you an extended period of time to cure any arrearages on debts that were not discharged under the Chapter 7 Bankruptcy.
Under Chapter 7 Bankruptcy, there are no debt limits and you receive your discharge quickly. It is a great way to discharge unsecured debts, but there are some limitations. For example, you cannot discharge a mortgage or an auto loan under Chapter 7 Bankruptcy.
Under Chapter 13 Bankruptcy, creditors are forced to give the debtor extra time to pay off secured debts – such as mortgages and auto loans. It is a lengthier process, but ultimately can provide greater relief.
When you file a Chapter 13 immediately after your Chapter 7 is granted, you are able to drastically reduce your overall financial burden. This is called a Chapter 20 Bankruptcy. Sometimes, the court will even allow you to file the Chapter 13 Bankruptcy before your Chapter 7 Bankruptcy case has closed, but after debts have been discharged.