None of my clients are ever happy about having to file for bankruptcy. They hope it will be a one-time thing and that they will never get into debt again. For most of my clients, that is the case. They have moved on after the bankruptcy, repaired their credit, gotten better jobs, purchased homes, etc. Unfortunately, some people find themselves in debt again. There is a misconception that people can only file for bankruptcy once in their lives. While there are some restrictions on how often a person can file for bankruptcy, you can file for bankruptcy more than once.
The most common type of bankruptcy is a Chapter 7, which helps you eliminate credit card debts, medical bills, personal loans, utility bills, etc. Eight years must pass from the date you file a Chapter 7 until you can file another Chapter 7. If you find yourself with debt problems before those eight years is up, you can file a Chapter 13 bankruptcy instead.
A Chapter 13 bankruptcy is a payment plan that lasts between three and five years, which allows you to repay a portion of your debt and get caught up on car payments and mortgage payments if you have fallen behind. If you have filed a previous Chapter 7, you can file a Chapter 13 bankruptcy at any time. However, if less than four years has passed from the date you filed your Chapter 7 until the date you filed your Chapter 13, you are not eligible to have any of your debts forgiven in the Chapter 13. In this situation, the Chapter 13 is still useful to help get caught up on car payments, mortgage payments, taxes and to get relief from student loans. If more than four years have passed from the time you file your Chapter 7 until you file your Chapter 13, you are eligible to have your debts forgiven upon successful completion of the Chapter 13 payment plan.
If you successfully complete a Chapter 13 bankruptcy, with some limited exceptions, you must let six years pass between the time you filed that Chapter 13 and the time you would file a Chapter 7 bankruptcy. You only have to let two years pass if you want to file another Chapter 13.
What happens if you don’t successfully complete your bankruptcy? If the first bankruptcy was a Chapter 7, you can file a Chapter 7 or a Chapter 13 at any time. If your first bankruptcy was a Chapter 13, you can file a Chapter 7 at any time. If your first Chapter 13 was dismissed due to the fact that you could not afford the payments, you cannot file another Chapter 13 unless there has been a change in your circumstances that makes it more likely that you would be able to afford the payments a second time around.
While no one wants to file for bankruptcy more than once, sometimes it becomes necessary. Luckily, no matter what type of bankruptcy you had in the past and how long ago it was, there is type of bankruptcy that is available to help you with your debt problems now. If you find yourself in debt, don’t let a prior bankruptcy prevent you from calling us. We would be happy to have you in for a free consultation to go over your options with you.