Submitted by Rachel R on Mon, 01/28/2013 - 11:14am
If you’re declaring bankruptcy for the first time, or at least considering it, your financial situation might feel so overwhelming that you can’t imagine it ever getting straightened out. This leads some people to wonder what happens if they find themselves in the same situation down the road. Or those who may have filed for bankruptcy protection in the past may be wondering if they are able to file again. Here is what you need to know about declaring bankruptcy multiple times.
First, an issue of semantics needs to be cleared up. You can file for bankruptcy as many times as you like. The more important issue at hand is how often can you get what you’re really looking for, which is the fresh start offered by the discharge of debts. That has strict limitations in the bankruptcy laws that were overhauled in 2005.
If you file a Chapter 7 bankruptcy, you will not receive another discharge of debts until 8 years after your last filing. If it’s the Chapter 7 bankruptcy you’re considering, once every 8 years is the limit in terms of having your debts discharged, assuming you meet the required means test and other criteria.
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But let’s say you filed a Chapter 7 bankruptcy some number of years ago and find yourself in deep financial trouble again. If your Chapter 7 was filed within the last 8 years, you can’t get another Chapter 7 discharge. However, depending on how much time has passed, you may be able to receive a discharge by filing a Chapter 13 bankruptcy, the type of filing where you develop a repayment plan to pay off as many of the debts as possible over 3-5 years, with the rest being discharged. The soonest you could receive a discharge in a Chapter 13 after a Chapter 7 would be four years after the Chapter 7 was filed.
You may be wondering, then, how someone like Donald Trump could have declared bankruptcy four different times – in 1991, 1992, 2004 and 2009. They key is the kind of bankruptcy he was filing, which was the Chapter 11 type that reorganizes the debt of a failing business. Corporations can file for Chapter 11 as often as they think they need to, but the courts have to agree that the reorganization would be better than a dissolution.
If your last bankruptcy filing was a Chapter 13, the soonest you could engage in another Chapter 13 program would be two years later. As previously mentioned, a Chapter 13 can only follow a Chapter 7 if four years have passed. The same goes for a Chapter 13 following a Chapter 11 or Chapter 12 as well.
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If your financial situation has become desperate and you’re considering filing for bankruptcy, it’s only natural that you wonder what would happen if you experienced similar difficulties in the future. Now that you know the ins and outs of how frequently you can obtain a discharge of your debts through bankruptcy, you can focus on making the most of the fresh start you’ll receive so that you don’t wind up in the same situation again. Speak with a local qualified bankruptcy attorney to help you better understand your options.
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