The basics of subsequent bankruptcy filings

The basics of subsequent bankruptcy filings

Most people understand the protections and debt relief offered
by a bankruptcy filing. No matter what type of bankruptcy (Chapter
7, Chapter 13, Chapter 11 or another provision), the end result is
the same: significant debt relief and the opportunity for a fresh
financial start. Due to circumstances like job loss, emergency
medical expenses, an unexpected major expenditure (like a new air
conditioner or furnace for your home) or other unanticipated
economic strain, it might be necessary to file for bankruptcy more
than once.

The U.S. Bankruptcy Code recognizes the possibility that someone
may need major debt relief in the form of one or more subsequent
filings, so it does allow debtors who have previously received a
discharge through bankruptcy to file again. It is not as
straightforward as simply filing another paper with the bankruptcy
court, though. There are some key points that a debtor needs to
remember before undertaking a subsequent bankruptcy filing, first
and foremost that there are waiting periods between filings.

Marking time

While Congress, in drafting legislation that makes it possible
for debtors to seek bankruptcy protection more than once,
recognizes that financial circumstances do sometimes dictate
another filing, they don’t want to make repeat filings the first
response for someone facing a lot of debt. To combat the
possibility of “knee-jerk” subsequent bankruptcies, the U.S.
Bankruptcy Code sets forth waiting periods between one bankruptcy
and the next.

If the first bankruptcy was a
Chapter 7
and the debtor received a discharge, the debtor must
wait eight years before getting another Chapter 7 discharge. The
waiting period is cut in half (to four years) if the first
bankruptcy is a Chapter 7 and the next will be a Chapter 13.

If, on the other hand, the first bankruptcy was a Chapter 13,
the debtor can file another Chapter 13 after two years; most filers
can file a subsequent Chapter 13 almost immediately after wrapping
up the discharge on the first one.

A filer would need to wait only four years to file for a Chapter
7 bankruptcy after an original Chapter 13. There
is a caveat to this one, too. If the debtor’s original Chapter 13
bankruptcy resulted in the debtor paying off more than 70 percent
of his secured debt, there is no waiting period to file the
subsequent Chapter 7. Since Chapter 13 bankruptcies usually last
between three and five years, they, more than any statutory
provisions, dictate the necessary waiting period; the first one
must be completely discharged before a second can be filed.

Learning more

The area of bankruptcy law is complicated and difficult to
understand. Would you like more information about bankruptcy,
regardless of whether it is your first filing or a subsequent one?
Do you need help navigating the complex bankruptcy process? For
more information about bankruptcy and to determine if it is right
for your unique financial situation, seek the advice of an
experienced bankruptcy attorney in your area.

See the original article here:
The basics of subsequent bankruptcy filings