No one ends their bankruptcy thinking that they will need to do it again. However, as most people facing bankruptcy already know, you can’t plan for everything life throws at you. “Can I file bankruptcy again?” is a question that we get asked quite often. Whether there is a medical emergency, divorce, or if you lose your job – a second bankruptcy may be a viable financial option.
As a reminder, in a Chapter 7 all or most of your debts are discharged. In a Chapter 13, you are focused on reorganization so that you can repay some of your debts over time.
While there aren’t any rules on how many times you can file bankruptcy, the court does limit when you can file again. This can be confusing, because the length of time varies based on what type of bankruptcy you originally filed.
For example, you must wait 8 years in between Chapter 7 bankruptcies. The time is computed from the day that you filed your first bankruptcy.
Let’s say instead that you filed a Chapter 7 and now you need to file Chapter 13. In order to receive a discharge under Chapter 13, you only need to wait 4 years from the day that you filed your first Chapter 13.
If you received a prior discharge under Chapter 13 and now want a Chapter 7, you will need to wait six years. However, there are exceptions to this rule. If during your first bankruptcy, you paid back all of your unsecured creditors OR if you paid back at least 70% of the claims and the plan was made in good faith and was your best effort, you will not need to wait 6 years.
As you can see, the rules for when you are allowed to file subsequent bankruptcies can be difficult and confusing. If you find yourself looking at bankruptcy for a second time, call 5 Star Sacramento Bankruptcy Attorney Rick Morin at (916) 333-2222. We can help you figure out what type of bankruptcy is right for you.