Bankruptcy Basics: How Many Years Between Bankruptcies Now?

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 changed the timelines in the Bankruptcy Code. As of October 17, 2005, a debtor cannot get a discharge in a second Chapter 7 bankruptcy unless eight (8) years have passed since the filing of the first Chapter 7 bankruptcy. It does not matter that a debtor filed before 2005. If Mr. Smith filed for Chapter 7 bankruptcy on September 15, 1999, he is not eligible to receive a discharge in a second Chapter 7 until September 16, 2007.

For Chapter 13 bankruptcies, a debtor cannot receive a discharge unless four (4) years have passed since a discharge in a Chapter 7. (Before 2005, a debtor could file a Chapter 13 immediately after a Chapter 7 discharge and get a discharge–this was called informally a “Chapter 20″). A Debtor can still file a Chapter 13 immediately after a Chapter 7 discharge but cannot get a second discharge until the four years have passed. The Court will frequently issue a notice that the Debtor is not eligible for discharge should the case convert to a Chapter 7 case (debtors can move from one chapter to another chapter if their circumstances change or if the situation warrants such a change).

Additionally, a Chapter 13 debtor who has received a discharge cannot get another Chapter 13 discharge unless at two years have passed between the discharge of the first Chapter 13 and the discharge of the second Chapter 13.

Sound confusing? It is. And yet the writers of this 2005 Act call it a perfect law.

If you think this is a perfect law, I would like to talk to you about a bridge for sale.