How Often Can You File Chapter Bankruptcy?
Probably once bitten twice shy is not for some. The reason you find them filing Chapter 7 bankruptcy, getting a discharge, and, lo and behold, again getting into financial difficulties and ready to start all over again! In the case of Chapter 13 too, people falter in payments after a year or two, get their case dismissed and are ready to file again.
There may be genuine reasons in both the cases, for no one takes pride in declaring bankruptcy. But, debtor’s do misuse these provisions.
Filing for bankruptcy once again
If you are in a situation that you have to file for bankruptcy again, you have got a problem on your hands. The federal bankruptcy law has set limits as to how often you can file for bankruptcy.
And if you think by doing so, you can get an automatic stay, where you can prevent your creditors from, say, repossessing your car or foreclosing your house or continuing lawsuits, etc., you may be disappointed. This is because, even though you are allowed to file bankruptcy again, the federal law restricts or delays automatic stay.
Eligibility for filing bankruptcy again
Can you file bankruptcy twice? There are no restrictions on how many times you can file bankruptcy, unless the bankruptcy court has some reservations about it and prohibits you from doing so. Did the court discharge your debts in the initial bankruptcy case? Then, you need to wait for some time before you can file bankruptcy again and get a discharge.
Your eligibility for filing basically depends on the following:
- When did you file your previous bankruptcy case?
- What type of bankruptcy did you previously file and which one are you wanting to file now.
- What was the outcome of your previous bankruptcy – was it discharged, dismissed or dismissed with prejudice.
You are free to file the bankruptcy again (with some restrictions), if the bankruptcy court dismissed your previous case without a discharge.
However, you will have to wait if the bankruptcy court discharged your case as follows:
How often can you file for bankruptcy chapter 7 and chapter 13
- If you had filed Chapter 7 bankruptcy previously and want to file another Chapter 7 bankruptcy, the wait is of eight years from the date of filing initial bankruptcy.
- If you want to file fresh Chapter 13 bankruptcy, after getting a discharge in a previous Chapter 13 bankruptcy, the wait is two years after filing the earlier case. This doesn’t pose much of a problem, since discharge in Chapter 13 case, as it is, takes three to five years, so immediate filing is possible after receiving a discharge in Chapter 13 case.
- How soon can you file Chapter 13 after Chapter 7? In case, you had filed Chapter 7 bankruptcy and got a discharge and now you want to file Chapter 13 bankruptcy, you will need to wait it out for four years after filing the earlier case.
- For filing Chapter 7 bankruptcy, if you had previously filed Chapter 13 bankruptcy, the wait is six years from the time of first filing.
Under the following conditions, court can reduce the waiting period:
- You had paid at least 70 percent of unsecured claims
- Proposed the Chapter 13 payment plan in good faith
- Made your best efforts to make it work
Court dismissed your Chapter 13 case the first time
Now here’s a case that needs some explaining. You filed Chapter 13. However, due to certain circumstances you were unable to complete your payments and the case is dismissed. So, can you file bankruptcy case again? Yes, you can, provided you did not get a discharge and your case was dismissed.
So, how soon after a dismissed Chapter 13 can you file again? If this happens, you can file a fresh Chapter 13 case right away. There is a possibility of debtors resorting to filing several cases in quick succession, only to get them dismissed. Although this is not a good idea, it is possible.
The reason a debtor would file several cases in quick succession is when he faces a threat to his property and wants to prevent foreclosure or its repossession by creditors. Once this threat is over, the debtor seeks dismissal of the case by approaching the court.
Alternatively, he or she may simply stop paying the plan payments leading to its dismissal by the court. When the creditor renews its collection efforts, the debtor preempts it by filing a new case.
The bankruptcy laws have catered to this scenario where a debtor tries to hoodwink the bankruptcy court. This is why the Bankruptcy Code has provisions where, even though, it allows the debtor to file a new case, it limits automatic stay. This helps to prevent the debtor from misusing the bankruptcy laws.
Cases pending within 12 months
- One case pending: Did you know you can get some preference in filing the second case if you had one previous bankruptcy case pending in the last 12 months that was dismissed. In such cases, you can file a bankruptcy case a second time. However, the automatic stay will only be for the first 30 days of the second case. In those 30 days, creditors cannot undertake collection actions, including repossession, foreclosure, etc. After this period the stay will lift automatically. You need to approach the court to extend the automatic stay.
- Two cases pending: In case you have two cases pending within the last 12 months, the court allows you to file a third case, but it will be without any automatic stay. If you want this, you need to approach the court separately. In such a situation, creditors will be at liberty to undertake repossessions, foreclosures, lawsuits, garnishments, or contact you in any manner and form they deem fit.
Courts criteria for extending stay
In the above cases, you can ask the court to extend the stay. The court will base its decision on the following factors:
- The number of cases filed by you.
- Non-payment, error, filing incomplete paperwork, or not cooperating with the trustee was the reason for dismissal of your case.
- Your creditor filed for relief from automatic stay in order to repossess your car or foreclose your property.
- Your changed circumstances since the dismissal of your case.
Reasons for denial of the bankruptcy discharge
- You can get into big trouble if you attempt to defraud by concealing, transferring or moving property. Always take your bankruptcy attorney into confidence, before taking any of these actions.
- Concealing or destroying information will go against you. And this includes not properly maintaining your financial documents that show your financial situation. So, it is advisable to keep all your financial records safe and organized for easy scrutiny.
- If you think you can lie in court, think again. Lying under penalty of perjury is bound to get you into the soup that can also result in a jail term.
- You also cannot hide your assets and term them as lost. This is because the court, your trustee and your creditors will be all out to catch your lie of lost or deficient assets.
- You will certainly be asking for it if you refuse to comply with a court order. If you do, the court will certainly show you who’s the boss.
- Those who are filing bankruptcy case need to take two instructional courses in finances – credit counseling and financial management. Your discharge can be denied just because you failed to take these instructional courses.
Do you really want your bankruptcy case taken up by the court? Then, it is best not to commit any of these offenses.
Why should you go in for filing Chapter 13 bankruptcy?
The following are the advantages of filing Chapter 13 bankruptcy, even if you are not eligible to achieve a discharge of debts:
- In Chapter 13 filing, the automatic stay remains regardless of your ability to discharge debts. For instance, if you have been directed by, say, IRS to pay all your tax debts within 24 months, you can stretch this time period to over 60 months, simply by filing a Chapter 13 case, and that too at zero percent interest!
- Although 100 percent student loans need not be paid during the 60-month Chapter 13 by filing multiple back-to-back Chapter 13 cases, you can continue to protect student loan payments.
- You can go in for a Chapter 13 case to remove a junior lien against your home, even though you have received Chapter 7 discharge. In this case, you will not be getting a Chapter 13 discharge. The bankruptcy professionals term it as doing a ‘Chapter 20’ case.
Professional bankruptcy attorneys a must
A qualified and experienced bankruptcy attorney is a must for tackling all situations arising in a bankruptcy case. In Georgia, Galler Law, a bankruptcy law firm, boasts of unmatched success in helping thousands of residents of Atlanta in obtaining debt relief through the bankruptcy system.
Filing for bankruptcy is a complex process. Even more complex if you have previously filed a bankruptcy case and want to file another one. To this end, Galler Law attorneys have an enviable reputation for getting bankruptcy discharges for their clients.