The personal bankruptcy process is designed to help those in severe financial distress. Claiming bankruptcy is often a last resort for those who are drowning in debt and dealing with demands from creditors and is generally considered to be a one-chance solution to a one-off problem. However, some people unfortunately find themselves requiring a bankruptcy claim more than once in their lifetime.
So, how soon can you file bankruptcy again? Read on…
Legally you are permitted to file for bankruptcy as many times as you like, but it may not be as beneficial for you each time. The length of time you are required to wait between the filings depends on what chapter of the U.S. Bankruptcy Code you filed before and which one you plan on filing, as well as how long it has been since the filing or discharge of your previous bankruptcy claim.
If your bankruptcy case was dismissed either voluntarily or at the decision of the courts for just cause or abuse of the process, you will have to wait 180 days before being able to file a subsequent case under either Chapter 7 or 13. As a result of the dismissal, your debts will not be discharged and your stay will also be ended. This means that creditors will once again be free to pursue their collections. Involuntary dismissals can be sought by the trustee, creditor, or other party and are usually based on the following:
• Not paying the fees and costs associated with your case
• Not filing necessary paperwork
• Not providing the required information in an accurate and complete manner
• Not complying with the requirements such as receiving credit counseling
• Not completing the process in a timely manner and causing unnecessary delay
Personal bankruptcy is usually filed under Chapter 7 or Chapter 13. The main difference between the two is that Chapter 7 is the traditional notion of liquidation where a trustee is responsible for selling off your assets to pay off the creditors, and Chapter 13 is for those who have sufficient disposable income to be able to repay a portion of their debts.
If you filed for Chapter 7 bankruptcy previously, you will have to wait 8 years before being able to do so again. At which point you will be granted a discharge of your eligible debts. However, if you do not require your debts to be discharged, probably because you do not have any eligible debts in that category, you may wish to file under the Chapter 13 which can be done any time following your previous bankruptcy filing. In order to have debts discharged under Chapter 13, you will be required to wait 4 years.
If you filed for Chapter 13 previously, you may do so again at any point but your unsecured debts will not be discharged. Waiting for 2 years prior to a repeat filing will ensure that your debts will qualify for discharge. If your next filing is under Chapter 7, you will be required to wait 6 years unless you have paid off a minimum of 70% of your debt to unsecured creditors from your previous bankruptcy filing.
Filing bankruptcy severely affects your credit for up to 10 years and, as such, should be considered very carefully before proceeding. However, there are many circumstances in which people find that declaring bankruptcy is the only solution and it is comforting to know that it is a process that can be completed more than once, if necessary. Prudent financial planning is the best way to sort out financial trouble before they become overwhelming, and considering the rules regarding multiple bankruptcy filings should help you plan your financial future.
For more information on how to claim bankruptcy and to see if the personal bankruptcy process is right for you, consider filling out our free bankruptcy evaluation.
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