Did you know that it’s possible to file bankruptcy more than once? For former debtors, a bankruptcy petition paves the way for a fresh start and a bright financial future. However, an unexpected turn of events such as sudden illness in the family, loss of income, or closure of business can spark another round of financial burden.
The good news is that even if you have a prior bankruptcy record, you may still submit a new petition after you fulfill the time requirement specified under the bankruptcy code.
The sections below will help you determine if declaring bankruptcy the second time is the best option given your unique situation. You’ll also find valuable insights as to which types of bankruptcy you can consider depending on the former chapter you filed.
The bankruptcy act stipulated a set number of years that must pass between bankruptcy filings geared towards abuse prevention. Essentially, once you receive your discharge notice from the court, your “bankruptcy” clock is reset and you won’t be eligible for another bankruptcy court discharge until you get past the time gap.
Time Requirements Before Another Bankruptcy Discharge
How long you’ll have to wait before your loan debt becomes discharged under a second bankruptcy filing will depend on the filings in your credit history, filed chapter, and bankruptcy case outcomes (discharge or dismissal).
For instance, if you have filed for bankruptcy under Chapter 7 in the past, you’ll wait for a fewer number of years than if you’re refiling a Chapter 13 petition in bankruptcy. However, the opposite is true for Chapter 13 filers: the waiting time is shorter if they file a bankruptcy petition under Chapter 13 instead of Chapter 7.
To avoid complications during a refiling, it’s best to contact a bankruptcy law firm in your area who can advise you on when and how you should begin your second bankruptcy application.
The main rule is that these time limits apply only to debt discharges and not to your bankruptcy filing per se. To understand this, consider the situations below:
Scenario #1: An individual struggling with debt file for bankruptcy but the case gets dismissed because there was an improvement in his financial problems.
Scenario #2: A filer received a case dismissal after filing bankruptcy under Chapter 7 and then failing to abide by bankruptcy laws and procedures such as attendance in the meeting of creditors, payment of filing fees, or incomplete paperwork.
Which of the two scenarios would allow you to refile bankruptcy? Although the latter is a negative dismissal, the truth is, both scenarios allow you to file yet again, and since there was no discharge, the time limit does not apply. However, an exemption applies to individuals falling under the second scenario, who must wait 180 days before starting the second bankruptcy process.
If you successfully pay all your unsecured debts, pay back to lenders what you owe, or faithfully abide by your repayment plan, you may be able to qualify for other exemptions from the time requirement. Talk to an experienced bankruptcy lawyer to know if you’re eligible.
Reapplications for Bankruptcy
The biggest hurdle that prevents people from filing for bankruptcy again is the belief that they are ineligible for various reasons as simple as a notation on their credit report. What they don’t know is that they’re missing out on an opportunity to wipe dischargeable debts such as medical bills and credit card debt.
If you are overwhelmed by such debt problems, reach out to a Northwest Debt Relief Law Firm bankruptcy attorney who can clear these matters for you. If you’re worried about how this affects credit-reporting, your lawyer can inform you on how you can rebuild your credit after bankruptcy.
Another possible roadblock in refiling is the lack of knowledge on bankruptcy options that a debtor can take. If you’ve chosen to declare personal bankruptcy before, you can still consider the same path or explore other chapters of bankruptcy with the help of our law firm. Our bankruptcy attorneys will help protect your assets and properties, discharge your nonexempt loans, or repay your creditor under a new agreement.
Find a reliable partner in debt management. Contact our office for a free consultation today.