The decision to file for bankruptcy is not easy for most of my clients. Many go through months, even years, of calls and letters from creditors demanding money my clients just don’t have. Filing bankruptcy a second time is even harder. Nobody said life is fair, and sometimes when the fresh start promised by bankruptcy is starting to take hold another misfortune happens. This is when I get the call asking if filing a second bankruptcy is even an option. You can still do it, yet timing can be a little complicated at times. Even though you are allowed to file bankruptcy as often as you need to, the real question is whether your debts can be discharged in a second case. Here are a few basic guidelines to help answer your questions.
Chapter 7 After Chapter 7
If your first Chapter 7 case resulted in a discharge, you have to wait eight years from the date the first case was filed to receive a discharge in the second case.
Chapter 13 After Chapter 13
If your first Chapter 13 case resulted in a discharge, you will have to wait two years from the date the first case was filed to receive a discharge in the second case.
Things get more complicated if you file your second Chapter 13 within two to six years after you filed your first Chapter 13, and your Chapter 13 plan in the second case cannot be confirmed.
In a typical case, you could convert your case to a Chapter 7 if your plan is not confirmed. To know whether you can receive a discharge converted case, you have to look to the rules that address Chapter 7 discharges after a Chapter 13 discharge. These rules may prevent you from getting a discharge in the converted case. I told you things could get complicated.
You have to wait six years from the date your first Chapter 13 was filed to receive a discharge in a Chapter 7 case.
But there’s more! You can still receive a discharge in Chapter 7 without waiting six years if:
· all your unsecured creditors were paid in full in the prior Chapter 13, OR
· at least 70% of the claims in the Chapter 13 were paid, and the Chapter 13 plan was proposed in good faith and was your best effort.
Chapter 7 First, Then Chapter 13
If you received a discharge in Chapter 7 in your first case, you have to wait four years after the date of filing the Chapter 7 to receive a discharge under a subsequent Chapter 13 case.
What if you cannot get a Chapter 13 plan confirmed? You can always convert your case to a Chapter 7. The rules regarding filing back-to-back Chapter 7 cases will determine if you are eligible to get a discharge. You will have to consider whether it would make sense to dismiss your Chapter 13 case.
Second Bankruptcy Filing Despite No Discharge
There are some situations in which you might still benefit from filing a Chapter 13 case after getting a Chapter 7 discharge, despite not getting a discharge in the Chapter 13 case. This is commonly known as a Chapter 20. For instance, there are certain large debts that are payable through a Chapter 13 that will protect large assets. For instance, if you have fallen behind on your mortgage payments, you can catch up on those missed payments by paying them through a Chapter 13 plan. In this case you would be able to prevent your mortgage lender from foreclosing on your home because the Automatic Stay may still apply. You aren’t looking to have your debt discharged, you just need some time to catch up on your mortgage.
Make sure you speak with a bankruptcy attorney who can better help you assess whether filing a Chapter 20 will help you achieve your goals.
No discharge in the first case?
You can still receive a discharge in a second bankruptcy filing, but as you might have guessed by now, there are some exceptions.
First Case Resulted In Dismissal
You can file right away unless the court says otherwise. For example, you may have to wait 180 days to file another bankruptcy if your case was dismissed for failure to obey a court order, you voluntarily dismissed your case after a creditor filed for relief from the automatic stay, or you failed to appear in the case. Being able to receive a discharge does not necessarily mean the automatic stay will remain in effect. This all depends on the reason for the dismissal. In some cases the stay is only valid for a short period of time. Your attorney will know if this applies to your case and may be able to file a motion to extend the stay as soon as your second case is filed if it does.
First Case Resulted in a Denial of Discharge
If you were denied a discharge in your first case, you may be able to file a second case. However, you will most likely not be eligible to receive a discharge in the second case. You should consult your bankruptcy attorney to assess how you will be affected by this rule.
No Two Cases Are Alike
I’ve laid out a framework to help you consider whether you can file a subsequent bankruptcy. Since the facts are different in every case, you should consult with a bankruptcy attorney to explore your options more fully.