Bankruptcy proceedings are significant life events, and when the proceedings are over the emotional and financial effects of bankruptcy may linger in the minds of filers for years. Unfortunately, while many bankruptcy filers take their fresh financial start and are able to sustain sound finances going forward, in today’s rough economy some may find the need to file for a second bankruptcy.
Most people file under Chapter 7 or Chapter 13 bankruptcy. Under Chapter 7, nonexempt assets are sold to pay off creditors, with much of the remaining debt able to be discharged. Under Chapter 13, the filer pays a portion or all debt owed under a repayment plan that may last up to five years. If a person earns more than the median income of his or her state of residency, then the individual may have to file Chapter 13 and not be eligible to file Chapter 7. Eligibility for filing a second bankruptcy also depends on which chapter of the bankruptcy code the filer used the first time.
Eligibility
Regardless of whether a person filed Chapter 7 or Chapter 13, the individual may still be able to file bankruptcy again, but must meet certain eligibility requirements. For Chapter 7, a bankruptcy filer must wait eight years from the first discharge date before filing for Chapter 7 protection again. A person may file for Chapter 13 as soon as four years after having debt discharged under a Chapter 7 bankruptcy. If the debt was discharged under Chapter 13, then the person must wait six years to file Chapter 7 bankruptcy. Those seeking Chapter 13 protection need only wait two years after the original Chapter 13 debt was discharged to file again.
Before filing any bankruptcy, the filer must again pass a means test, which determines whether, based on income, the debtor has the ability to pay creditors. Before petitioning the bankruptcy court for a second time, the filer must also attend debt counseling.
Next Steps
Whether you are considering filing bankruptcy for the first or the second time, you should consult with an experienced bankruptcy attorney to determine which type of bankruptcy protection is appropriate for your situation.
