Declaring bankruptcy is a significant decision that requires careful consideration. If you are considering declaring bankruptcy multiple times, it is even more important to conduct thorough research and engage in dialogue to ensure that you are fully informed about your options. Although there is no explicit rule that prohibits individuals from seeking bankruptcy relief multiple times, there are important factors that should be taken into account. This blog provides an in-depth exploration of filing for bankruptcy multiple times.
Multiple Bankruptcy Filing Under the Same Bankruptcy Chapter
There are no restrictions on filing for Chapter 7 bankruptcy again, regardless of when your prior case was filed. However, if the court grants you a bankruptcy discharge in your previous Chapter 7 lawsuit, you won’t be eligible to declare another Chapter 7 bankruptcy case. Additionally, you won’t seek discharge in your new bankruptcy case for eight years from the filing date of the previous case. The specific dates are determined based on your actual declaration date.
There are no restrictions that prohibit you from declaring Chapter 13 bankruptcy within a certain timeframe after filing under Chapter 13 in your previous bankruptcy case. The analysis depends on whether you were granted a bankruptcy discharge in your previous lawsuit and whether you’re requesting one in the current Chapter 13 case, similar to the guidelines for repeat Chapter 7 petitions.
The two-year waiting period between case filings applies if you were discharged from a previous Chapter 13 bankruptcy case and you’re currently applying for a discharge in your current Chapter 13 lawsuit. This means that if you have previously filed for Chapter 13 and obtained a discharge, you must wait at least 2 years from the initial filing date before filing for Chapter 13 bankruptcy again to request a discharge in your current case.
Multiple Bankruptcy Filings Under Various Chapters
The timeline differs when considering applying for bankruptcy under a chapter that is different from your previous case. As mentioned earlier, the filing date for subsequent bankruptcy cases depends on the outcome of the previous case and the intention to seek a bankruptcy discharge in your subsequent case.
If you choose to file a Chapter 13 bankruptcy case after previously filing a Chapter 7 case and seeking a bankruptcy discharge, you must wait four years between the declaration of the previous Chapter 7 case and the current Chapter 13 case.
If you have previously declared a Chapter 13 bankruptcy case, obtained a bankruptcy discharge, and are now attempting to declare a Chapter 7 case to obtain another discharge, you must wait six years between filing the previous case and submitting the current one. Note that the dates correspond to the actual declaration dates of the lawsuits.
Factors That Can Hinder You from Filing for Bankruptcy More Than Once
Although there is no legal limit to the number of times one can file for bankruptcy, practical considerations may impose restrictions.
First, a bankruptcy court has the authority to prevent you from filing if your actions are offensive or if your sole intent is to irritate or delay your creditors. In such a scenario, the court may reject your case and impose a "1-year bar," which would prohibit you from declaring bankruptcy for a year.
Secondly, there are limitations on how often you can receive a discharge under the bankruptcy code. In other words, the statute sets limits on the frequency of debt forgiveness. If you received a discharge for your obligations in your initial bankruptcy, you will have to wait for a certain period before your obligations can be discharged again. As a result, although you are allowed to declare bankruptcy multiple times, you will not be granted a second bankruptcy discharge until after a predetermined period.
There are several reasons why you might consider filing for bankruptcy, even if your debts cannot be completely erased. For instance, you might want to declare to establish a payment schedule, catch up on mortgage installments, or make up for missing auto payments.
Depending on the circumstances of your previous bankruptcy case, the type of bankruptcy discharge you obtained, and the type of lawsuit you are filing, you may or may not be eligible to receive a discharge of debt in your subsequent bankruptcy case. Below, we will discuss these guidelines.
If filing for bankruptcy is not something you want to do, there are alternative options available. A smart starting point is to participate in a debt counseling meeting with nonprofit organizations. They can help you explore your choices, which may incorporate debt management plans. While qualifying for a debt management plan may be more challenging than bankruptcy, it has a lesser adverse impact on your credit score.
Another advantage of managing debt is the ability to end the schedule at any time. While waiting for the bankruptcy time restriction, a debt management plan can provide you with much-needed relief.
Bankruptcy Discharge
The main reason someone files for bankruptcy is usually to get a discharge from court. The bankruptcy court grants the discharge. The court relieves you of your responsibility to repay certain debts by granting the discharge. After bankruptcy discharge, you may remain personally liable for some debts and obligations that were waived.
When a person files for bankruptcy, they often get their credit card obligations, personal loans, medical bills, deficiency sums from auto repossessions or delinquent leases, and overdraft bank accounts dismissed. Student loans, alimony/child support commitments, and recent tax payments are examples of common debt obligations that are typically not dismissed.
Re-filing for Bankruptcy Following a Dismissal
Although the terms "dismissal" and "discharge" may seem similar, they are different. A discharge indicates that you have successfully fulfilled all the conditions imposed by the court. As a result, your case is now closed, and you are no longer responsible for the debts in question.
A dismissal of your lawsuit results in its closure, but it does not resolve your unpaid debts. It may appear like you never declared bankruptcy, and as a result, you may face renewed harassment from your creditors as you find yourself back at the beginning.
After being dismissed, you have the option to file again, but the timing of your appeal will depend on the grounds for your appeal. For instance, if you are considering filing for bankruptcy, you should first enroll in a debt counseling program from an authorized provider within one hundred and eighty days.
Your counselor can advise you on whether filing for bankruptcy is the best option or if registering in a debt management program, also known as DMP, would be a better choice. If you choose to file for bankruptcy, you will need a certificate that confirms your completion of the counseling program.
If you fail to cooperate, the court will automatically dismiss your lawsuit. However, if you quickly enroll in the class, you may have the opportunity to refile your lawsuit immediately. If it appears that you are attempting to manipulate the system, you could be required to wait for 180 days before refiling.
The bankruptcy law describes this as the deliberate failure of a borrower to follow the instructions of the bankruptcy court or to properly prosecute the case by showing up before the bankruptcy judge."
Some instances might be:
- Destroying documents.
- Concealing or moving assets to deceive lenders.
- Telling lies in court.
In other words, if you operated in good faith, then you can quickly refile. However, regardless of how many times you've filed for bankruptcy, the first step you should take is to engage a professional bankruptcy lawyer or consult with a licensed credit counselor to receive expert guidance.
How An Automatic Stay Operates During A Repeat Bankruptcy Filing
When filing for bankruptcy again, you should consider whether to initiate an automatic stay or not. The automatic stay, once initiated, prevents lenders from taking action such as wage garnishments, foreclosures, bank levies, collection efforts, and lawsuits. It gets its name because it takes effect immediately after filing the bankruptcy petition. However, repeated filings may limit the authority of the automatic stay.
An automatic stay remains in effect for only 30 days after the declaration of the subsequent case, provided that the individual had a previous bankruptcy case within the past year. If the debtor wishes to extend the automatic stay beyond this period, they can request an extension from the bankruptcy judge.
However, if the individual had two ongoing bankruptcy cases within the year before the declaration of the subsequent lawsuit, no stay is imposed upon its submission. In such cases, the debtor can approach the magistrate to request the initiation of a stay.
Tips To Consider Declaring Bankruptcy Multiple Times
Before declaring bankruptcy, it is important to make necessary preparations to ensure a smooth process.
Consider the following four suggestions:
- Determine whether declaring bankruptcy once again is the only option remaining. You can explore all available alternatives for debt relief before filing for bankruptcy again.
- Take a close look at your financial situation and determine whether Chapter 13 or Chapter 7 bankruptcy is the most suitable option for you. It's important to understand the consequences of each kind, including how it will impact your credit rating and whether you’ll be able to retain some of your possessions.
- Verify that you have filed more frequently than advised. Note that the schedule is determined by each bankruptcy declaration, not the date of discharge.
- To assist you in navigating your options and ensuring that you are taking the right step, you can consider speaking with a bankruptcy attorney. The majority of attorneys offer free consultations, allowing you to discuss your situation without incurring any charges.
Alternatives to Multiple Bankruptcy Filing
Filing for bankruptcy can be advantageous for individuals seeking to alleviate their debt burden. However, you should consider the detrimental effects it can have on your credit rating, as well as the significant psychological and financial costs involved. Additionally, if debt becomes an issue again, the deadlines for filing for bankruptcy a second or subsequent time may present additional challenges.
Working with a credit counselor can provide viable options such as debt negotiation or consolidation, instead of waiting out the required amount of time. Additionally, consulting a bankruptcy attorney can help you explore alternative solutions.
Debt Settlement
For unsecured obligations like credit cards or medical debt, this can be a sensible strategy. In this method, you work with a counselor to determine a payment amount that will pay the debt. While it may not be the full amount, the lender is guaranteed they will get something, as opposed to receiving nothing in bankruptcy.
Debt Consolidation
By combining multiple unsecured obligations into one, this strategy lowers the interest rate and allows for a single monthly payment. The credit counseling organization typically receives the payment first and then distributes it to the creditors. However, you should note that this method requires consistent cash flow and timely payments. Additionally, selecting a consolidation option could demand a credit rating of 670 and above.
Forbearance
If you are having trouble paying your debts on time each month, consider asking your lender if you could temporarily suspend payments. However, you should note that during this time, interest may still be accruing. Therefore, it is crucial that you fully comprehend the terms and conditions before making any decisions.
Increase Your Earnings
Having more money available will enable you to pay down your debt. Consider exploring additional income streams, such as selling used clothing, teaching online, or starting a side business, to generate extra cash.
Find a San Diego Bankruptcy Lawyer Near Me
Bankruptcy filing may seem straightforward in theory, but it can be a complex process in practice. Once you've decided to pursue this route, it’s crucial to have a competent bankruptcy lawyer by your side. While you may have trust in many lawyers, not all of them can offer the level of care and expertise that you require. At San Diego Bankruptcy Attorney, our mission is to deliver the highest quality legal services to achieve the best possible outcomes for our clients. If you need further details or want to book a consultation, feel free to call us today at 619-488-6168.
