Is It Legal to File for Bankruptcy More than Once
Fighting financial troubles is never easy, and in most cases, there are no ideal solutions. One of those options is bankruptcy – not the most favorite solution for most people, but a welcome respite in some cases.
Bankruptcy is a big step, and not be pretty or fun, but it can help you get your life back on track and recover from the financial problems gradually.
Still, many people are unsure about the fine details of bankruptcy? For instance, can you file for bankruptcy more than once? Bankruptcy experts at the Law Offices of Mark L. Miller chime in with the answer.
Multiple bankruptcies Are a Thing, But There Is a Catch
Legally speaking, the bankruptcy laws in the US do not preclude you from filing for bankruptcy multiple times. One of the most American things is getting a chance to reinvent yourself and to succeed as many times as you need.
However, this freedom could be exploited by scammers if not properly regulated. That’s why there are certain limitations to this freedom. These mainly concern the time between two bankruptcies.
Chapter 7 Bankruptcy Details
If you’re not overly familiar with bankruptcy, Chapter 7 is what most people think when they say ‘bankruptcy’. It’s the more direct type of bankruptcy – your possessions will be sold off in order to pay the creditors, which also makes it more rigorous, too.
However, much of your debt can also be written off, easing the burden on your finances. This aspect of Chapter 7 makes it fairly popular among people considering bankruptcy.
That being said, if you’d previously undergone Chapter 7 bankruptcy,you may be limited in your eligibility to file again.
As many as 8 years need to elapse since your previous Chapter 7 bankruptcy before you can file again. In fact, every time you want to file for Chapter 7, the eight-year waiting period will apply. If, however, you want to switch to Chapter 13, the waiting period is halved to just 4 years.
Chapter 13 Bankruptcy Details
Unlike Chapter 7, where your possessions are sold off, and some of your debt is erased, Chapter 13 is more about restructuring your debts – you will still end up paying them back, you’re only looking for restructuring and some respite from your creditors.
This type of bankruptcy results in a contract with your creditors to give you some time to consolidate your finances and resume your payments at a later date. Generally, your debts will end up being paid off in full, with no write-offs.
If you’d used the option of Chapter 13 bankruptcy before, there is an obligatory waiting period of 2 years before you can file for the same type of bankruptcy again. However, due to the nature of Chapter 13, the whole process can last anywhere between two and five years. That basically means that you may be eligible for a new Chapter 13 as soon as the previous contract expires. Whether your creditors will be willing to go through another round of bankruptcy with you is a different matter.
That being said, if your financial woes are not over once your Chapter 13 bankruptcy contract expires, you may need to go for Chapter 7 bankruptcy. However, there is a waiting period of 6 years. Even though it sounds like a long time, this strict waiting period can be waived entirely if you paid off all of your Chapter 13 debts. Along the same lines, if you paid off at least 70% of your Chapter 13 debts, and are able to show that you had the intention and good faith to repay the rest in full, there is a chance your waiting period for Chapter 7 can be shortened.
Keep in mind that these conditions listed above only apply if everything in your bankruptcy case goes according to plan.
Sadly, more often than not, bankruptcy cases are strained and problematic. If the courts find out that you lied about your financial situation, hid some assets from your creditors or the court, chances are that your case will be penalized and that you will face some additional conditions before a new bankruptcy chance is given to you.
If you’d had negative prior experiences with bankruptcy, your best option is to consult a bankruptcy lawyer to get the exact details of your potential future case.