When someone receives a bankruptcy discharge, they are certain they will never need to file another bankruptcy. However, life happens, and we often find ourselves in situations we never imagined, including contemplating ANOTHER bankruptcy. It is not unusual for a debtor who has previously filed for bankruptcy to need to file again for relief from creditor payments.
The “2 4 6 8 Rule” is a straightforward way to understand the timeframes for successive bankruptcy filings. It’s important to remember that all timeframes refer to the time between the filing date of the prior bankruptcy and the filing date of the subsequent bankruptcy.
2 years – If a debtor previously filed a Chapter 13 case, completed the plan, and received a discharge, they can file a second Chapter 13 case and receive a discharge two years after the debtor filed their first case.
4 years – If the debtor previously filed a Chapter 7 case and received a discharge, they can file a Chapter 13 case and receive a discharge four years after the debtor filed their prior Chapter 7 case.
6 years – If the debtor previously filed a Chapter 13 case and received a discharge, they can file a Chapter 7 case and receive a discharge six years after the debtor filed their prior Chapter 13 case. The debtor can immediately file the subsequent Chapter 7 if (a) the debtor paid 100% to all creditors in their first Chapter 13 case or (b) the court determines that the debtor gave their “best effort” to pay creditors at least 70% of their debts in the previous case.
8 years – If the debtor previously filed a Chapter 7 case, they can file another one and receive a discharge eight years after they filed their first case.
In some rare cases, a debtor may be unable to wait the requisite time, needing immediate bankruptcy protection (i.e., the Automatic Stay). The subsequent case is allowable, but there will be no discharge of debts. For instance, if the debtor has fallen behind in their mortgage or car payments, the Chapter 13 filing can prevent foreclosure or repossession and allow the debtor up to 60 months to bring their secured debt payments current.
If the debtor voluntarily dismisses a Chapter 13 case, the debtor must wait 180 days before they can refile.
Only the bankruptcy judge can dismiss a Chapter 7 bankruptcy case, usually upon the motion of a party, like the Chapter 7 trustee. It is unlikely that a bankruptcy judge would grant the debtor’s motion to dismiss their Chapter 7 case because it is rarely in the best interest of creditors.
If the court dismisses a bankruptcy case, the debtor can refile the case immediately. The court may dismiss a bankruptcy case if, for instance, the debtor fails to file the required schedules timely or fails to appear at the 341 Meeting of Creditors.
If the debtor has had more than one case pending within the last 365 days, the automatic stay only lasts 30 days in the second case unless the debtor moves to extend the stay within 30 days of filing. If the debtor has had three cases pending within the last 365 days, the third case has no stay until the bankruptcy judge grants the debtor’s motion to impose the stay. The court liberally grants Motions to Extend or Impose the Automatic Stay upon a showing of (1) why the prior case was dismissed and (2) that the circumstances in the new case suggest the new case will succeed – commonly known as “a substantial change in circumstances.”
At Blue Bee Bankruptcy, our lawyers are highly experienced in bankruptcy options. More importantly, we understand that each case we receive is unique and each client has different needs and goals. We will discuss these signs with you and decide the best route to take.
We strive to help our clients rebuild their lives and take steps toward a better financial future through filing.
If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.
Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!
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