May 20, 2020

Can You Declare Bankruptcy More than Once?

Bankruptcy laws have changed over the years. That has left some people wondering if it’s possible to seek bankruptcy protection more than once. The short answer is yes, provided certain conditions apply. Here is what you should understand about Chapter 7 and Chapter 13 bankruptcy and how you could seek more protection at a later date.

Chapter 7 Bankruptcy and Seeking Protection a Second Time

A Chapter 7 bankruptcy is designed to discharge non-priority debts. In most cases, the period of time between the filing and the court approving the action is a few months. Once your debts are discharged, you are no longer in debt and have the opportunity to begin rebuilding your credit rating.

What some people don’t understand is that it’s not possible to file a second Chapter 7 action immediately. That means if you run up quite a bit of debt over the next couple of years and find yourself unable to make your payments, there will be no going back to the court for another discharge.

Eight years must pass between the date that you filed the first petition for the Chapter 7 bankruptcy and the date that you file for a second one.

How Does Filing Again Work with a Chapter 13 Bankruptcy?

A Chapter 13 bankruptcy will also help you get out of debt, but the process is longer. Depending on the amount of debt you owe and what you can afford to pay to the court each month, it could be three to five years before the bankruptcy is complete. If any debt mentioned in the filing remains after three to five years, it’s discharged in full.

Should you need this same type of protection again, it is possible to file a second time. The period between is much shorter than with a Chapter 7 bankruptcy. Instead of eight years, you will only have to wait two years.

Is It Possible to File Both Forms of Bankruptcy in a Short Period of Time?

What if you have filed for one form of bankruptcy and later find that you need to file the other form? It is possible to do that, although the order in which you file will have some impact on the waiting period.

Assume that you filed a Chapter 7 petition the first time and it was approved. Four years after that original filing date, you are free to file a petition for a Chapter 13 bankruptcy.

In some jurisdictions, an approach that’s sometimes referred to as a Chapter 20. This scenario would involve filing a Chapter 7 bankruptcy to discharge all of your non-priority debts. You would then file a Chapter 13 to receive protection as you pay off priority debts that could not be discharged as part of the Chapter 7. Since this is not a process that’s allowed in all districts, check with your lawyer to see if this available.

What if you filed a Chapter 13 first and later needed to file a Chapter 7? It’s possible to seek that Chapter 7 six years after the Chapter 13 filing date. That means if your Chapter 13 took five years to resolve, you will need to wait one more year before filing the Chapter 7.

While your hope is to never need bankruptcy protection again, it’s good to know what the limitations and time frames that apply. If you’re not sure how your situation fits in with current laws, talk with a lawyer. You’ll soon have the answers and the information that you need.