Can I file bankruptcy twice?
Limits placed on debtors who need to file more than one bankruptcy.
When financial troubles follow someone who has already filed bankruptcy, the U.S. Bankruptcy Court provides for additional bankruptcy filings under certain conditions.
In cases in which the bankruptcy was dismissed and the debts remain, there are some limits on court protection when other cases are filed within one year of the first petition.
"If it is your first bankruptcy, the automatic stay [which halts debt collections and lawsuits], lasts until either you get a discharge or a creditor obtains relief from the stay," according to Mark Aalam, a Calfornia attorney writing on NationalBankruptcyForum.com. "If it is your second bankruptcy filing in one year, the automatic stay lasts only 30 days, and then terminates, unless you get a court order extending [it]. If it is your third bankruptcy filing in one year, there is no automatic stay, unless you ask the court to impose one and the court grants your request."
If an individual's debts were discharged in a Chapter 7 case, the most common form of personal bankruptcy, another Chapter 7 filing will not be allowed for eight years. The debtor who has gone through a Chapter 7 case may file under Chapter 13, which requires them to pay creditors through a court-ordered repayment plan.
Once the repayment plan is completed, the individual's unsecured debt, such as credit cards or medical bills, will be discharged only if they filed the Chapter 13 case at least four years after the Chapter 7 case was filed.
If four years didn't elapse before the Chapter 13 bankruptcy was filed, the individual is still able to proceed knowing their unsecured debt will not be discharged. However, the benefits are that creditors can be repaid through a low monthly payment plan and may be used to pay past taxes, student loans or remove a second mortgage from your home, according to the Southern California Law Associates website.
A Chapter 7 case may also be filed after a debtor has received a discharge of unsecured debt in a Chapter 13 bankruptcy, but they will only receive a full discharge if the new case is filed six years after the first one. If the Chapter 7 case is filed less than six years later, the debtor must have paid at least 70 percent of the Chapter 13 debts to get a discharge.
Two years must elapse between two Chapter 13 cases in order to have the unsecured debt discharged in the second case.
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