Unfortunately, many consumers find themselves in a financial situation where they need to file bankruptcy more than once, despite their best efforts to avoid it. Whether it is due to recurring medical bills, repeated job losses resulting in a garnishment or leaving you with a car loan you can't afford to pay, you can file bankruptcy more than once. In this article, we will look at just how often you can file bankruptcy depending on the previous chapter you filed and what other debt-relief options are available if someone is precluded from filing bankruptcy. We’ll also take a look at whether a bankruptcy attorney can help you file bankruptcy sooner.
Bankruptcy is a legal way for individuals who can no longer afford to pay their debts to get permanent debt relief through a bankruptcy discharge. The Bankruptcy Code provides for three types of consumer bankruptcies known as Chapter 7 bankruptcy, Chapter 11 bankruptcy, and Chapter 13 bankruptcy. A Chapter 7 bankruptcy liquidates a consumer’s non-exempt assets and eliminates all of their dischargeable debt, including credit card debt, without requiring repayment of any kind. A Chapter 13 bankruptcy reorganizes a consumer’s debts and allows them to retain all their property (including real estate) by consolidating and reducing their debts into one monthly repayment plan. The debts that don’t get paid as part of the repayment plan are discharged once the plan has been completed. The discharge of your debts gives you the fresh start they need. Chapter 11 bankruptcy provides similar relief to that provided in Chapter 7 and Chapter 13, but is generally reserved for filers with small or family businesses or significant assets and is a lot more expensive than even a Chapter 13 bankruptcy. This article will focus specifically on Chapter 7 and Chapter 13 bankruptcy.
Summary of the amount of time needed between the first case and the second bankruptcy case, depending on the type of bankruptcy filed.
The first question we need to answer is what happened in your prior bankruptcy filing. If your previous case resulted in a successful discharge of your unsecured debts, then the time limit allowed between discharges will depend on the type of bankruptcy you filed originally and the type you now intend to file.
- Chapter 7 to Chapter 7 (8 years) - If you previously filed a Chapter 7 bankruptcy and received a discharge and are now looking to file a Chapter 7 case again, you have to wait eight years has passed from the date your prior case was filed.
- Chapter 7 to Chapter 13 (4 years)
If you previously received a Chapter 7 discharge and are now looking to file a Chapter 13 case, you have to wait four years after the date of filing your original Chapter 7. Keep in mind, this time limit only refers to receiving another discharge. There may be a circumstance where you would want to file a Chapter 13 after a Chapter 7 without the intention of obtaining a discharge. Perhaps you got behind on secured payments, like a car loan or real estate mortgage after your Chapter 7 and need the protection of the bankruptcy court to stop a foreclosure or repossession. Perhaps your student loan payments are more than your monthly income can support and filing a Chapter 13 can give you relief by putting you in a payment plan without needing a second discharge. Filing cases in this sequence can be referred to as a “Chapter 20.”
- Chapter 13 to Chapter 13 (2 years)
If you previously filed a Chapter 13 case and received a discharge and are looking to file a Chapter 13 case again, you have to wait at least two years from the filing date of the previous case.
- Chapter 13 to Chapter 7 (6 years)
Finally, if you received a Chapter 13 discharge and now are considering filing a Chapter 7 case, you need to wait six years from the first filing date. This waiting period can be waived if you paid back 100% to your unsecured creditors in your Chapter 13 plan (or in some cases where you paid back 70% of your total debts) and the original case was found to be in good faith.
Do I have other debt-relief options?
If you are in between bankruptcy filings and unable to file another bankruptcy, you may have to consider other debt-relief options like debt consolidation or debt settlement. Debt consolidation typically involves taking out one large loan to “combine” all of your debt into one payment with a lower interest rate. This typically requires a good to great credit score. Another form of debt consolidation involves retaining the services of an accredited nonprofit credit counseling agency to assist you with a debt management plan. In a DMP, you establish a plan with a credit counselor to pay off all of your debts over a period of time. You do this by making payments to the credit counseling agency who in turn pays your creditors. These companies however usually include a fee for their service in your monthly payment and require that your creditors agree to be included in the repayment arrangement. Debt settlement, on the other hand, involves you, or a representative of yours, negotiating with one or more of your creditors to take a lump-sum payment from you for less than you owe them, in exchange for having the remainder of the debt forgiven. Just remember, none of these non-bankruptcy debt relief options are legally binding or come with any kind of automatic stay that would prevent your creditors from suing you or garnishing your wages while you are taking advantage of them.
Can a bankruptcy attorney help me file bankruptcy sooner?
A bankruptcy attorney can’t help you file bankruptcy sooner than the time limits set forth by law, but they may be able to help you file a different type of bankruptcy than you filed before. For example, if you filed a Chapter 7 bankruptcy less than eight years ago, a bankruptcy attorney can’t help you file another Chapter 7 bankruptcy. But they may be able to help you file a Chapter 13 instead, so scheduling a free evaluation with a law firm can’t hurt. In addition, a bankruptcy lawyer may be able to more accurately calculate if you are eligible to file another Chapter 7 bankruptcy again or not. This is especially true if you filed a Chapter 7 bankruptcy and it was dismissed without a discharge being granted to you. Typically in this case, unless there is a court order that prohibits you from filing again, you can usually refile your Chapter 7 bankruptcy immediately.
In short, you can file more than one bankruptcy in a lifetime. If you previously filed a Chapter 7 bankruptcy and want to file Chapter 7 again, the time period is eight years from when you last filed. If you filed Chapter 7 and want to file a Chapter 13, the time period is four years from when you filed Chapter 7. If you filed a Chapter 13 and want to file another Chapter 13, the time period is two years from when you last filed. And if you filed a Chapter 13 and want to file a Chapter 7 the time period is six years from when you filed.