Top 15 Lies About Bankruptcy. Lie #14: You Can Only File Once for Bankruptcy Protection

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 “Chapter 20,” 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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Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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