07 Feb Top 15 Lies About Bankruptcy. Lie #14: You Can Only File Once for Bankruptcy Protection
Lie #14: You Can Only File Once for Bankruptcy.
There is a common misconception that you get only one shot during your lifetime to file for bankruptcy. While it’s not something you would want to do regularly, the fact is that sometimes things go wrong. A serious illness. A bad business deal. An unexpected job loss. If you filed for bankruptcy before, it doesn’t mean that you can’t do it again.
There are restrictions, however. For Chapter 7 cases, they may be found in Section 727 of the Bankruptcy Code.If you received a Chapter 7 or Chapter 11 discharge, you cannot receive another Chapter 7 discharge for 8 years. After 8 years, if need be, you can file a Chapter 7 again. The 8 years is counted from the filing date of the first case to the filing date of the second case, not from discharge to filing. If you received a discharge for a case under Chapter 12 or 13, you usually need to wait 6 years. This six year period may be eliminated if the Chapter 12 or 13 plan paid all unsecured claims in full, or paid at least 70% of such claims, was proposed in good faith, and represented your best efforts.
The rules for filing a Chapter 13 or a Chapter 11 are a bit more complex.
If you want to receive a Chapter 13 discharge, Section 1328 of the Bankruptcy Code lays out the rules. If you received a discharge in a previous Chapter 7, 11 or 12 case that was filed more than 4 years before the current Chapter 13, you can receive a Chapter 13 discharge. If you received a discharge in a previous Chapter 13 case, you need to wait only two years after the discharge was entered to file a new case.
In many Chapter 13 cases, however, you do not really need to get a discharge. For example, if the only purpose of filing the Chapter 13 is to catch up on mortgage payments, or taxes, or a domestic support obligation, and you don’t have any unsecured debt, such as credit cards, a discharge of debts isn’t necessary. In these cases, you can file immediately after receiving a discharge under another Chapter (subject to good faith objections).It is very common, for example, to file a â€œChapter 20,â€ which is a Chapter 7 to discharge unsecured debt followed in short order by a new Chapter 13 to deal with mortgage or tax arrearages.
The Court, the Trustee and others involved in your case won’t see you as a bad person just because you have to file more than once. Everyone recognizes that sometimes bad things happen that require a repeat filing.
Hopefully, however, you will never need to file more than one bankruptcy.
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