Under Chapter 13 bankruptcy, a debtor makes payments to a court-appointed trustee for three to five years according to an agreed-upon repayment plan. The trustee is responsible for disbursing these payments to the petitioner's creditors. At the end of the repayment period, all outstanding eligible debts with these creditors are discharged and the creditors are no longer permitted to make attempts to collect this debt.
A husband's previous Chapter 13 bankruptcy may have previously been dismissed for a variety of reasons. A common reason for a dismissal is because the husband failed to make his payments in accordance with the repayment plan. The trustee also may have sought to dismiss his bankruptcy for a technical reason, such as his failure to list all creditors or an error on the bankruptcy paperwork. A more serious reason for dismissing his previous case is if the court found that he filed for bankruptcy in bad faith or, even worse, fraudulently.
Depending on the reasons for the dismissal of the husband's Chapter 13 bankruptcy, he may be able to refile his petition within 180 days if the dismissal was voluntary or on technical grounds. The husband may also be eligible to immediately file for bankruptcy under Chapter 7 if his income falls below the state's median income as determined by the court. However, if his case was dismissed because he engaged in misconduct, he may be prohibited from filing any new bankruptcy cases based on an order issued by the bankruptcy judge.
A wife may elect to file for Chapter 13 bankruptcy after her husband's case is dismissed for various personal or financial reasons if she has not filed a case in the previous 180 days. A common reason to file immediately after her husband's bankruptcy dismissal, rather than waiting 180 days or filing under Chapter 7, is to prevent foreclosure on the couple's home. Since the home is likely owned jointly by both spouses, the "automatic stay" will protect the couple's home, car and any other property owned by both spouses by stopping collection efforts by creditors during the bankruptcy process.