By Ryan C. Wood

Filing for bankruptcy protection will provide you with the opportunity to get out from under your debts and truly obtain a “fresh start” when all your unsecured debt is discharged.  However nothing is easy and you may filed for bankruptcy again if you issues in the future.  You have to strikeout more than once sometimes to hit a homerun.  The Bankruptcy Code has rules on how long you have to wait before you can file another bankruptcy case again after your discharge whether that be in chapter 7 or chapter 13 bankruptcy.  If we are allowed to discharge out debts at any moment there should be chaos in our financial system.  Only large multi-national conglomerate corporations get bailed out entirely by the government regardless of that they do.  They are too big to fail while us individuals re too small to matter.  We do have bankruptcy though to wipe it all away and start over though.

In a Chapter 7 bankruptcy case, all of your dischargeable unsecured debt (such as credit card debt, medical bills, personal loans, deficiencies from repossessions, etc.) will be discharged.  Assuming there are no issues in your Chapter 7 bankruptcy case, the case is normally held open for approximately three to four months to provide your creditors with the opportunity to object to your bankruptcy case.  If there are no objections, then your debts are discharged and your case is closed.  In a Chapter 7 bankruptcy case, there is no repayment of your unsecured debts.  Thus, since all of your unsecured debts were discharged, you will not be allowed to file for another Chapter 7 bankruptcy case until at least 8 years after your previous Chapter 7 bankruptcy case was filed.  If you are concerned about your future ability to file another case discuss future limitations with your bankruptcy lawyer prior to filing.

In a Chapter 13 bankruptcy case, you will be repaying a certain percentage of your debt back to your creditors.  After repaying your debts for three to five years, whatever unsecured debt left unpaid after the three to five years is discharged.  Since you have been repaying some of the debt back to your creditors, the Bankruptcy Code is more lenient and allows you to file another bankruptcy case sooner.  If you have previously filed a Chapter 13 bankruptcy case, the Bankruptcy Code allows you to file a Chapter 7 bankruptcy case 6 years later.  If you have previously filed a Chapter 7 bankruptcy case, you can file a Chapter 13 bankruptcy case 4 years later.  Finally, if you have previously filed a Chapter 13 bankruptcy case, you can file another Chapter 13 bankruptcy case 2 years later.

The easiest way to remember the rules is that there are 2-year differences between each rule:

1) Chapter 7 to Chapter 7 = 8 years

2) Chapter 13 to Chapter 7 = 6 years

3) Chapter 7 7 to Chapter 13 = 4 years

4) 13 to 13 = 2 years

Be sure to let your bankruptcy attorney know that you filed and received a discharge in a prior case no matter how long ago it was.  It is important that a global view of your circumstances be evaluated including prior bankruptcy filings.

While some will criticize the multiple filings for bankruptcy protection there is usually much more to the story that is not known.  The highly critical people are also the ones that have never tried anything in their life.  They have worked for others and others takes risks and build businesses.  They do not understand or know how challenging it is to build something then sustain it against all odds.  Nothing is easy and there are so many ways for circumstances outside of the business owners control that can destroy the business overnight.  The mortgage meltdown in 2008 and the more recent COVID pandemic response are prime examples.  Even the horrible wildfire season of 2020 is another example of how to get wiped out and have done nothing wrong or made bad choices.  This why we are lucky to have the Bankruptcy Code and the legal ability to discharge our debts and move on.