When a person files for chapter 7 bankruptcy, the hope is that they keep their financial affairs in order. Certain steps in the bankruptcy process are design with the specific intent of preventing future bankruptcies. However, it is not unheard of for an individual to need a second go at bankruptcy. If you have filed for chapter 7 in the past and you find yourself in situation where you may need to repeat the process, then there are some things that you should know.
Do you have to wait to file again?
Most people would be surprised to learn that there is no code that specifically sets a time limit on a second bankruptcy filing after chapter 7. However, there are limitations set on the amount of time that you have to wait to receive another discharge of debt. Since the discharge of debt is a fundamental component of a chapter 7, it does in a sense exclude the individual from receiving this type of debt relief for the prescribed period of time.
How long do you have to wait for another discharge?
If you have received a discharge of debt under chapter 7 bankruptcy, you will have to wait before you are eligible to receive a second discharge under chapter 7. If you are going from one chapter 7 to the next, then you must wait at least eight years before you can receive a discharge of debt under this type of bankruptcy.
Are there other options?
If you are ineligible for a discharge under chapter 7 because of the time restrictions, this does not mean that you are out of options. If you have filed for chapter 7 and then find that you need debt relief again before the eight years has elapsed, you could consider filing a chapter 13 bankruptcy.
For a person that has filed a chapter 7 and is ineligible for a second because of the time restrictions, there is the possibility of filing for a chapter 13. However, some conditions will apply. The most notable condition is that the petitioner will not be eligible to receive a debt discharge under the chapter 13 if the chapter 7 was within the last four years.
If it is in this four-year period, a chapter 13 can still provide the individual with some valuable protection. Even if you can’t get the discharge of debt, the chapter 13 can still provide you with protection from creditors while you pay your debts. As an example, if you are behind on your mortgage, the bankruptcy court could protect your home from foreclosure while you catch up.
Filing for bankruptcy is a big step and it is something that people should go into with a full understanding of the implications. The court takes the discharge of debt seriously, and the law sets time restrictions on the discharge of debt in order to discourage abuse of the system. If you have filed for chapter 7 in the past, then you should make every effort possible to avoid needing it again. However, there are cases where every honest effort is made and the individual still finds that they are once again buried in unmanageable debt. In this situation, the best you can hope for is that all time restrictions have passed, but if they have not, there may still be some legal remedies available.