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Serial Chapter 13 bankruptcy filer denied future discharge

Many Washington residents find themselves in financial distress. They turn to the U.S. Bankruptcy Court for help, protection and a chance to start over financially. However, if they file too many Chapter 7 or Chapter 13 bankruptcies and essentially abuse the system, the court could deny them a discharge now or in the future.

This is what happened to an out-of-state woman who is best characterized as a serial filer. Since 2002, she filed Chapter 7 and Chapter 13 numerous times. In 2013, she filed Chapter 13 for the fifth time. The fact that she filed several times is not the issue in and of itself. The problem is that she failed to receive approval from the court to spend a settlement she received from a dispute with her employer despite agreeing to seek the court's approval before disposing of any asset in her repayment plan.

The Kansas woman received $25,000 from her employer and spent it even though she was obligated to inform the court of the settlement. When the trustee filed an objection, the woman filed a motion to dismiss her Chapter 13. During that process, she admitted her intention to file a sixth Chapter 13 in the future. The court exercised its right to deny her the ability to discharge the debts included in the current Chapter 13 in any subsequent filing, but gave her 21 days to reconsider dismissing her case before executing the order.

The bankruptcy court exists to help people here in Washington and elsewhere who experience financial difficulties. Even when this woman abused the rules of her Chapter 13 bankruptcy, the court still gave her a chance to sort out her financial issues. Anyone who believes that they need a fresh financial start should not hesitate to file, but the process is complex and one misstep can result in a dismissal or denial of a discharge, so seek out help and guidance to receive the best chance at success.

Source: bna.com, "Repeat Ch. 13 Filer Can't Wipe Out Debts in Future Bankruptcy", Dec. 16, 2016

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