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Repeat bankruptcies may be a problem

South Carolina consumers who are considering bankruptcy as a method of debt relief may want to take heed of a December case involving a debtor who had filed for bankruptcy multiple times. The woman had filed under Chapter 7 or Chapter 13 on four prior occasions.

Her ffith petition was filed in 2013 for Chapter 13 bankruptcy protection. After she filed the case, she then sued her employer and obtained a settlement of $25,000. Instead of getting permission from the trustee, she didn't provide the funds to the bankruptcy estate and spent them instead.

The trustee objected, and the woman then filed a motion to dismiss her Chapter 13 bankruptcy petition. The U.S. Bankruptcy Court for the District of Kansas, where the case was heard, ruled that it could not prevent her from dismissing her petition. However, the court ruled that she would not be able to discharge the debts that were included in her Chapter 13 petition in a future bankruptcy case. The woman had stated that she planned to file a new Chapter 13 petition. The court did give her 21 days to decide if she wanted to modify her Chapter 13 repayment plan or move forward with dismissing the case.

People who are considering filing for protection under Chapter 13 of the Bankruptcy Code need to be aware that they will required to report all additional income that they receive to the trustee after the petition has been approved. If they try to avoid doing so, their cases may be dismissed and their discharge may be disallowed. An attorney can mention this during the preparation of the proposed repayment plan prior to its submission.

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