Filing Bankruptcy a Second Time
The bankruptcy laws were enacted to give people a second chance, in recognition that circumstances or poor decisions can lead to situations that can only be remedied by the discharge or reorganization of debt. But what if you get a few years down the road from a bankruptcy and find yourself in the same situation again? The cause could be something completely out of your control — an injury, illness or divorce. Can you seek bankruptcy protection again? If so, what are the limitations?
Multiple Bankruptcy Filings
Under the Bankruptcy Code, you can almost always file another bankruptcy after having previously done so. There are no prohibitions against filing a Chapter 7, Chapter 11 or Chapter 13 bankruptcy more than once. Unless the previous bankruptcy was dismissed within 12 months before, a new bankruptcy will provide you protection from creditors through the “automatic stay”. This protection ends when the case is closed or when a court enters an Order granting “stay relief” to a creditor (generally limited to creditors with collateral, called “secured creditors”
The lasting protection from bankruptcy comes through the bankruptcy discharge, and this is not available if you have filed too soon after a previous bankruptcy where you received a discharge. If your previous case was filed under Chapter 7 bankruptcy and you got a discharge, you won’t be eligible for another discharge in Chapter 7 for eight years from the date of the first filing, or four years if you choose to file a new case under Chapter 13. If your first filing was a Chapter 13 bankruptcy, you can qualify for discharge with another Chapter 13 once two years have passed since your first filing. If, however, you want to file a Chapter 7 petition after a prior Chapter 13 bankruptcy, you must wait a minimum of six years from the date of the first filing to have the right to discharge your debts.
Sometimes a bankruptcy without a discharge can still be a good idea.
Sometimes a new bankruptcy that does not end in a discharge can still be a valuable tool. Typically, this will be a Chapter 11 or Chapter 13 case where the goal is not to discharge new debts, but instead to use the bankruptcy to bring a mortgage current, pay off taxes or other debt, or even to force creditors to accept payment terms. This is a whole new subject we have covered elsewhere (see articles and blogs on Chapter 20 bankruptcy)
Contact Neuner & Ventura, LLP
We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. We do, however, reserve the right to charge a fee to review any work done by another attorney. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.
Representing Clients across South Jersey