Financial trouble can hit hard and leave very few choices on the table. Many people find themselves needing bankruptcy protection more than once during their lives. You may have heard about waiting periods before filing for bankruptcy again, which can make things even more confusing when money is tight. The real deal is, anyone can file for bankruptcy as many times as needed, but the results won’t always be the same after repeated filings. This means some limits affect what you get back each time you turn to bankruptcy. Keep reading to discover how this works and what it means for those facing financial stress.
Waiting Periods
Technically, there is no limit on when you can file for bankruptcy a second time, but there is a limit on when you can receive a discharge your debts for the second time. If you meet the eligibility requirements to file for bankruptcy, you may file for bankruptcy again. In order to receive a Chapter 7 discharge, you must wait 8 years after a previous Chapter 7 filing; or 6 years after a previous Chapter 13 bankruptcy was filed. To receive a Chapter 13 discharge, the waiting period is 4 years after a previous Chapter 7 filing or 2 years after a previous Chapter 13 bankruptcy filing.
Debt Restrictions
As with any bankruptcy filing, you cannot receive a discharge of student loan debt, tax debt, child or spousal support payment debts, or any debts accrued through criminal or negligent actions. Although some debts may be able to receive a discharge through a second bankruptcy filing, it may not always be in your best interest to do so. If you have more secured debts such as mortgages, collateral-based loans; you will not be able to receive a discharge of these types of debts. Having more secured debts than unsecured debts (such as credit cards, medical bills) may not provide you with the debt relief you need when filing for bankruptcy a second time. On the other hand, unsecured debts are dischargeable in bankruptcy, and filing a second time may provide you with the debt relief you are seeking.
Bankruptcy Dismissals
There are some cases in which you are not allowed to file a second bankruptcy for at least 180 days after a bankruptcy dismissal. The debtor is responsible for completing a credit counseling course and filing the necessary paperwork before their bankruptcy case can receive a discharge. Failure to complete the necessary court orders can result in a dismissal of the bankruptcy case. If your case was dismissed due to failure to comply with the orders of the bankruptcy court, you may be prohibited from filing again within 180 days.
Filing for bankruptcy a second time can affect whether you are protected from creditors through an automatic stay. During the bankruptcy process, the automatic stay halts collection attempts from creditors. If your previous bankruptcy case is dismissed, you may not receive the full protection of the automatic stay. Typically, the automatic stay will only apply for 30 days after a second bankruptcy filing. In order to receive the full protection of an automatic stay, you must plead your case in court to demonstrate your legitimate need for protection during your current bankruptcy case.
Whether filing for bankruptcy protection for the first time or anytime thereafter, it is wise to seek counsel from a qualified bankruptcy attorney. Bankruptcy attorneys have experienced professionals that can guide you through the process during your difficult time.
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