IF you’ve ever had to file bankruptcy in the past for whatever reason, you probably told yourself that hopefully, you never have to do it again ever. But sometimes you never know where life takes you and if you ever find yourself in a financial bind where bankruptcy becomes necessary again, fear not. It is not your fault – and there is no reason to feel bad or sorry for yourself. Here’s what you need to know if you’re in that situation.
There is no shame in trying to protect yourself, your family and everything you own when the stakes are just too high, and you need to do what you need to do. For example, a lot of people have been struggling financially since the pandemic started. All the government assistance helped, I’m sure, but that was all temporary. A lot of people have lost their incomes and their businesses in the last two years and have not been able to pay their bills.
I’ve been asked by a lot of people lately about how often you can get bankruptcy relief, so I decided to write this article. If you have filed bankruptcy before, you may be wondering whether it’s possible to do it again. Generally, the answer is that you can file bankruptcy as often as needed BUT subject to some limitations such as the following. I will try to simplify but here are the general rules:
- Consecutive same Chapter filings: If you are filing under the same bankruptcy “chapter” (7 or 13), the timing is critical. If you are trying to file a Chapter 7 after you’ve already filed another Chapter 7 in the past, you need to wait 8 years from the date your last case was filed. For consecutive Chapter 13 filings – If you received a prior discharge in Chapter 13, you cannot receive a second discharge in any Chapter 13 case that is filed within 2 years from the date that your last case was filed.
- Chapter 13, then Chapter 7: If you obtained a prior discharge (i.e., a “debt wipe out”) under Chapter 13, you will not be allowed a second discharge in a subsequent Chapter 7 filing unless 6 years have passed from the filing of the Chapter 13 to the filing of your Chapter 7 case. There is however an exception to this rule – you will be allowed a discharge in your current Chapter 7 case if you either paid all unsecured creditors in your past Chapter 13 case or you paid at least 70% of the unsecured claims and the plan represented your “best effort” and proposed in “good faith.”
- Chapter 7, then Chapter 13: If you discharged your debts in a prior Chapter 7, you cannot obtain another discharge in a subsequent Chapter 13 filing unless four years have passed since your Chapter 7 filing date. This doesn’t mean, however, that you cannot file a Chapter 13 if your intention is to pay creditors the best you can. It only means that since there is no discharge available, whatever is not paid through your Chapter 13 plan will still be your liability. Now you may ask, “Why file a Chapter 13 then if a discharge is not available under these circumstances?” The answer is that it depends on what your goals are in filing the current Chapter 13. For example, one reason for filing may be to get court protection while consolidating non-dischargeable debts such as IRS taxes. Or it may be to stop a foreclosure and pay back the arrears through a 3- to 5-year payment plan.
There are other “tricky” rules you need to know about that apply to dismissals and conversions from one chapter to another, but I could just imagine how your head may be spinning by now trying to make sense of all these rules. The best thing to do if you are in a situation where you may need to file bankruptcy again (although you’ve already done so in the past) is to consult with a knowledgeable bankruptcy attorney who can analyze your case and provide correct guidance.
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The opinions, beliefs and viewpoints expressed by the author do not necessarily reflect the opinions, beliefs and viewpoints of the Asian Journal, its management, editorial board and staff.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray J. Bulaon has successfully helped over 6,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-471-8272.
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