When people file for bankruptcy, the goal is to stabilize a bad financial situation and hopefully come out on the other side with some restored financial freedom. But once bankruptcy is complete, money issues don’t always go away.
You may find you can’t avoid falling into a financial hole again, even after earning a restart through bankruptcy. At this point, you may wonder if and when another bankruptcy attempt can be made. Can a person file bankruptcy twice?
Can a Person File Bankruptcy Twice?
There is no limit on how many times you can file Chapter 7 bankruptcy. In fact, if your most recent bankruptcy bid was dismissed, you likely can file again as soon as you build a strong case.
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However, once you have earned a discharge through Chapter 7 bankruptcy, you are not immediately eligible to receive a second discharge. It is important to be aware of the wait times required after Chapter 7 and Chapter 13 bankruptcy if you count on another discharge of debt.
Filing Chapter 7 Again After a Chapter 7 Discharge
Once you’ve completed the Chapter 7 bankruptcy process and been granted a discharge of debt, you’ll have to wait eight years from your “petition day” or filing date to file again. You can actually file at any time, but you won’t be eligible for another discharge unless you wait the full eight years.
Your bankruptcy attorney will understand these time limits and will alert you to when you are eligible for a second discharge.
Filing Chapter 13 After A Chapter 7 Discharge
Depending on your financial situation, a Chapter 13 bankruptcy might be the best option for an additional bankruptcy filing. After you complete a Chapter 7 bankruptcy you should usually wait four years from your last filing date to file for Chapter 13 protection.
Filing for Chapter 13 bankruptcy before the four years is up is permitted, but you lose most of the benefits of your discharge day. Certain types of debt aren’t wiped away.
There are some benefits to filing for Chapter 13 bankruptcy even without the aid of a discharge. Filing for Chapter 13 bankruptcy right after a Chapter 7 bankruptcy is known informally as a “Chapter 20” bankruptcy. Chapter 20 is usually employed shortly after a Chapter 7 discharge to allow the filer to take advantage of Chapter 13 benefits. Chapter 20 filers use the Chapter 13 payment plan to pay off any debt not discharged in the previous Chapter 7 bankruptcy.
After a Chapter 13 Bankruptcy
Chapter 13 bankruptcy requires the commitment of filers to follow a payment plan to pay off a percentage of their debt. The payments are made each month over a three to five-year period.
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Filing Chapter 7 After a Chapter 13 Discharge
After completing a Chapter 13 payment schedule and earning a discharge, you’ll usually have to wait six years from the filing date to move forward with a Chapter 7 bankruptcy.
The six-year barrier is waived by the bankruptcy court in some instances, however. A judge will consider allowing a faster turnaround if you paid all of your unsecured debts in full during the Chapter 13 process. Compared to a secured debt, unsecured debt is any loan that is not backed by collateral. The loan is issued solely on the good credit standing of the borrower. Unsecured debt can include medical expenses and credit card bills.
The court will also consider letting you file sooner when you’ve paid 70% or more of your unsecured debt over the three to five years involved in a Chapter 13 filing.
Filing Chapter 13 After a Chapter 13 Discharge
An additional Chapter 13 bankruptcy discharge can’t be followed immediately by another Chapter 13 filing. You’ll have to wait two years from the previous filing date.
This means you will likely still be in the payment plan period of your last Chapter 13 filing when the two years are expired. The wait isn’t long if you decide you’ll require the relief of another filing. If you proceed before two years have passed, you won’t be eligible for a discharge in your second Chapter 13 bankruptcy.
Penalties that Can Impact Refiling for Bankruptcy
While you can usually try for another bankruptcy immediately if your most recent bankruptcy was dismissed, this isn’t always the case. In certain cases, you can be penalized if the court found your behavior less than helpful on your last attempt.
If your case was dismissed by a judge for disobeying a court order or failing to appear on your court date, you’ll have to wait 181 days from your last filing date to file for another bankruptcy. A bankruptcy judge also has the power to issue a special order forbidding you from filing for bankruptcy again.
Is It a Good Idea to File Bankruptcy Again?
Bankruptcy is usually about choosing between the lesser of two evils. Whether you are trying to file bankruptcy due to title loans or accrued debt, getting advice from a professional can make the choice much easier. There are circumstances in which you’re better off filing for bankruptcy and accepting the credit damage than continuing to be stuck in your current situation. By the same token, there are circumstances in which filing for a second bankruptcy is the shortest path to financial relief for you and your family.
The key is being able to determine which option leaves you on the best financial footing. Having a bankruptcy attorney is extremely helpful when you are at such a crossroads.
One bankruptcy is complex enough. Deciding if you should file bankruptcy again and whether another filing will be beneficial usually requires a legal expert who can examine your entire portfolio and your past bankruptcy history. Choosing a path without knowing exactly what you’re getting into can often make things much worse.
Contact a Bankruptcy Lawyer Serving Greater Los Angeles
Bankruptcy is supposed to throw a lifeline to people drowning in debt. But sometimes filers who have completed the bankruptcy process still find themselves in financial straits.
California law protects those who remain in turmoil after bankruptcy and grants them another chance to secure their financial footing. The Law Offices of Steers & Associates make sure anyone filing for bankruptcy knows their rights and is taking action that is beneficial to their situation.
Elena Steers, the founder of The Law Offices of Steers & Associates, has worked on both sides of the California bankruptcy process. She’s an expert in bankruptcy law and she puts her experience to work in your favor in the courtroom and at the negotiating table. Take a moment and read about her extensive background.
For a free bankruptcy consultation in Los Angeles or anywhere across Southern California please contact us today. The Law Offices of Steers & Associates handle bankruptcy cases of all sizes and have stood by their clients through difficult times to help them earn financial relief.
Elena Steers is a highly experienced bankruptcy attorney, the founder of Law Offices of Steers & Associates, and previously worked as a Bankruptcy Trustee Assistant at the Office of the Chapter 13 Trustee in Los Angeles. Her current affiliations include the State Bar of California, National Association of Consumer Bankruptcy Attorneys, and Central District Consumer Bankruptcy Attorneys Association.