Many people face multiple financial struggles, whether it's a financial emergency or debt. When someone is facing financial hardships, he or she would feel that declaring bakruptcy is his or her best course of action. However, is there a limitation to the number of times a person can file for bankruptcy? The answer to this is no.
A person can declare bankruptcy as many times as they choose---minus a court order stating otherwise. However, there are limitations on the timing or frequency of when you can apply and get a discharge. In this blog, we strive to provide clear answers to these questions. We'll look at this from every angle to ensure that there's no confusion about how many times an individual can declare bankruptcy.
Waiting Periods for Bankruptcy Filings
If your debts were discharged in bankruptcy, there would be a waiting time before you can secure a discharge for another bankruptcy proceeding. The waiting period is intended to protect bankruptcy laws from being abused and to deter individuals from racking up large credit card debts. The following are the current rules for declaring multiple bankruptcy claims as per the US Bankruptcy Law:
Multiple Chapter 7 Bankruptcy Filings
An individual can secure a discharge for Chapter 7 bankruptcy filed every 8 years. If the individual's previous Chapter 7 lawsuit was dropped or concluded without discharge, he or she can get a discharge in a subsequent Chapter 7 bankruptcy without waiting 8 years.
Multiple Chapter 13 Bankruptcy Filings
If you obtain a discharge for a Chapter 13 bankruptcy case, you would be ineligible for a subsequent Chapter 13 bankruptcy for at least 2 years. On the other hand, if you had a Chapter 13 or Chapter 7 case dismissed during the last 12 months, you could be eligible to file for another Chapter 13 bankruptcy. However, the automatic stay would only be in effect for thirty days.
You would also be required to file for a Motion to Extend the Stay that provides complete protection from your creditors during the duration of your case. If an individual has had two or more Chapter 13 and/or Chapter 7 cases dismissed within the last 12 months, then he or she would file another Chapter 13 bankruptcy case.
However, it's important to note that the automatic stay would not apply in this situation. You would be required to file for a Motion to Impose the Stay to secure protection from your creditors during the duration of the bankruptcy case.
Declaring Chapter 7 Bankruptcy Followed By Chapter 13 Bankruptcy Filing:
If an individual got a discharge under Chapter 7, he or she will be ineligible for a discharge under Chapter 13 until the 4 years have elapsed, that is from one filing date to the other.
Filing A Chapter 13 Bankruptcy, Followed By A Chapter 7 Bankruptcy:
If an individual got a discharge under Chapter 13 (filed within the last six years), then he or she is ineligible for bankruptcy under Chapter 7. You would also be ineligible if you paid less than seventy percent of your unsecured creditors under a Chapter 13 bankruptcy plan.
Some individuals would declare a different kind of bankruptcy in the second round, depending on how much they owe, the repayment options, or how long the bankruptcy remains on their record. A competent bankruptcy lawyer can clarify your alternatives and the appropriate debt relief strategy for you and your loved ones.
Conditions That Could Cause a Bankruptcy Discharge To Be Revoked
While you can declare bankruptcy multiple times throughout your lifetime, it's important to be aware that there are some circumstances under which your bankruptcy discharge may be revoked. No matter how many times you've been fortunate in declaring bankruptcy, you should never use it as a way to escape your obligations.
The bankruptcy court could still deny or revoke your discharge if you undertake the following:
Conceal information: Withholding facts about your financial position from your lawyer can land you in serious trouble with bankruptcy courts. You must maintain and keep all financial records organized.
Try to commit fraud: You would get into a lot of trouble if you attempt to hide or transfer a certain piece of property to escape liquidation according to Chapter 7. Before declaring bankruptcy, be sure to inform your bankruptcy lawyer of all property transfers that you have done. It is critical that you explain to the court the inadequacies and/or losses in your assets.
Failing to pursue instructional courses: When you apply for a bankruptcy discharge, you need to complete additional finance-related instructional courses like financial management and credit counseling. Failure to complete these required courses would result in the cancellation of your discharge.
Refusing to follow the court's directive: If you don't follow the court's order, you risk losing your bankruptcy discharge. If the court orders you to appear to justify yourself, you must do so.
Giving false information: This one should go without saying. Do not intentionally fabricate any documentation or give false information in court.
If you're found to have engaged in any of the actions listed above, a request to revoke your discharge would be submitted. The request could be made within one year of the bankruptcy discharge or before the lawsuit is closed. Before any revocation takes place, the bankruptcy court would determine whether the accusations of deception, fraud, or improper behavior are true.
Filing a Second Case Despite Not Being Eligible for a Discharge
The bankruptcy court could sometimes close or dismiss a bankruptcy filing without issuing a discharge. This could happen if you fail to attend bankruptcy court proceedings, fail to give documentation, conceal assets, disregard a court order, fail to complete the 2nd financial management program, or voluntarily dismiss your case. In such cases, you can instantly pursue another bankruptcy filing unless the previous case was dismissed with prejudice by the court.
Multiple bankruptcy declarations without any intention of finalizing the cases could lead to the courts dropping the matter with prejudice, in which case the individual must wait one hundred and eighty days before filing another bankruptcy case. The 180-waiting period could be applied to both Chapter 13 and Chapter 7 filings, or it could only be applied to another Chapter 13 case. Filing several Chapter 13 suits that are later dismissed may weaken the protection you have against your creditor.
Benefits of Double Filing
The key benefit of Chapter 20 bankruptcy is that it could allow you to wipe away more obligations over time than pursuing Chapter 13 or Chapter 7. Chapter 7 allows you to discharge unsecured debts such as medical expenditures and credit card bills. Meanwhile, a Chapter 13 bankruptcy allows you to create a 3- or 5-year repayment schedule for a portion of your unsecured and secured debts.
Declaring Chapter 7 bankruptcy first would allow you to reduce your debt and fall within the Chapter 13 debt limitations. Additionally, filing for Chapter 13 following the conclusion of a Chapter 7 bankruptcy case can provide you extra time to make up for late payments on debts like car and mortgage loans. Here's a rundown of the benefits of double filing:
It could allow you to pay off more debts in the long run
It grants you extra time to pay off past-due bills
It could be possible to reduce your debt under Chapter 7 bankruptcy first to be eligible for Chapter 13
Cons of Refiling
The following are some of the drawbacks of double filing:
You will still be unable to dismiss certain obligations, like child support, alimony, as well as some tax payments
You must demonstrate to the bankruptcy court that you are honest and sincere by filing for Chapter 13 following a Chapter 7 bankruptcy
To get a complete discharge of obligations under Chapter 7, you should wait 4 years before applying for Chapter 13 bankruptcy
Declaring both kinds of bankruptcy can prolong your efforts to have your financial house in order
Strategy to Employ in a Second Bankruptcy Filing
If you are considering filing for a 2nd bankruptcy, you should develop a strategy to make the procedure as easy as possible. Here are 5 actions to consider:
Determine whether there is another option besides declaring bankruptcy that will help you reduce your burden of debt. Before you declare bankruptcy again, evaluate all of the available debt relief alternatives
If there are no other debt-relief options, assess which kind of bankruptcy to declare on your second attempt
Investigate the repercussions of a 2nd bankruptcy, like how it would affect your record or whether you could lose any property or asset
Find out how long you should wait before filing a 2nd bankruptcy after your first declaration
Decide whether to apply for a 2nd bankruptcy with the help of a legal counsel or on your own
Multiple Filings and Credit Report
If you've declared bankruptcy at least twice, it will show up on your credit record for several years. There is a chance that they will overlap, in which case your credit file will show both bankruptcies. A Chapter 7 bankruptcy case that has been completed could stay on your record for up to ten years, while a Chapter 13 bankruptcy case that has been completed could remain for up to 7 years.
The following are some of the credit effects of several bankruptcy declarations:
The Elimination Of An "Automatic Stay"—Multiple bankruptcy filings would lead to the loss of an "automatic stay." This term means that it bars certain lenders from attempting to recover debts from the debtor
A Poor Credit Rating. As long as one bankruptcy—or both—appear on your credit file, your credit rating will remain low
Difficulty securing credit. It will most certainly make it more difficult to obtain credit, like a credit card or mortgage
Other concerns. It could cause issues when you want to secure a job, buy insurance, or move into an apartment
Other Debt Relief Alternatives
When it comes down to debt relief, bankruptcy is regarded as a last resort. Fortunately, there are other alternatives. They are as follows:
Seeking Consumer Credit Counseling
A debt management program can be created by a credit counselor to pay off all or a portion of your obligations. Consumer credit counseling services are often provided by non-profit organizations.
Securing A Loan For Debt Consolidation
The aim is to reduce higher-interest debt and consolidate multiple obligations into a single payment made monthly.
Getting In Touch With A Debt Settlement Firm
Debt settlement services are primarily offered by for-profit organizations. These programs would assist you in reducing your debts by negotiating with the lenders. However, debt settlement schemes are risky and should only be used as a last option.
Frequently Asked Questions
Here are a few of the most frequently posed bankruptcy-related questions.
What Are The Most Popular Types Of Individual Bankruptcy?
Individual bankruptcy is most commonly filed under Chapter 13 and Chapter 7. Chapter 7 entails selling property and/or assets and using the proceeds to settle debts, but Chapter 13 bankruptcy places an individual on a 3- or 5-year debt repayment schedule.
How Long Does A Bankruptcy Stay On Your Credit Report?
A Chapter 7 bankruptcy can stay on your credit file for up to ten years, while a Chapter 13 bankruptcy can remain on your file for up to 7 years.
Find a Sacramento Bankruptcy Attorney Near Me
You can declare bankruptcy multiple times, but there is usually a wait time between the filings. The length of your wait is determined by the type of bankruptcy you declared previously and the type of bankruptcy you intend to pursue next. A bankruptcy attorney can help you to understand your alternatives and determine the ideal course of action to follow.
If you need assistance with your bankruptcy case, feel free to contact our team at the Sacramento Bankruptcy Lawyer. Our experienced attorneys have helped clients navigate the challenging world of declaring bankruptcies for many years and have the expertise and knowledge to successfully guide you through a Chapter 13 or Chapter 7 bankruptcy. Feel free to reach us at 916-800-7690 for a free consultation.