Bankruptcy is a financial tool that enables consumers and businesses to obtain a fresh start financially. As with any other tool, it can be used more than once. Even if a consumer has received a Chapter 7 or Chapter 13 discharge in the past, he or she may still be able to seek relief under the Bankruptcy Code. However, there are certain restrictions when it comes to receiving a subsequent bankruptcy discharge. A knowledgeable Kansas City bankruptcy attorney can evaluate your present financial situation and prior bankruptcy history to determine your current bankruptcy options.
Prior Chapter 7 Discharge
Falling on hard times can happen more than once over the course of a lifetime. Sometimes people need to file bankruptcy even after they have wiped out their liability for certain debts with a Chapter 7 discharge. Assuming all other filing requirements are met, people who have received a discharge under Chapter 7 will become eligible for:
- Another Chapter 7 discharge eight years from when the previous Chapter 7 case was filed
- A Chapter 13 discharge four years from when the previous Chapter 7 case was filed
Even though a consumer with a prior Chapter 7 discharge has to wait four years before becoming eligible for a discharge under Chapter 13, consumers can file Chapter 13 bankruptcy any time after exiting Chapter 7 bankruptcy. Sometimes Chapter 13 bankruptcy benefits debtors even if they’re not yet eligible for a discharge. For example, if someone receives a discharge under Chapter 7 and then falls behind on mortgage payments within a year, that person may be able to file under Chapter 13 to catch up past due mortgage payments, although he or she won’t be able to discharge any debts through the bankruptcy.
Prior Chapter 13 Discharge
Chapter 13 bankruptcy allows consumers to pay off debts through an affordable repayment plan over a period of three to five years, unless all debts can be paid off sooner. When the repayment plan is complete, most remaining debts are discharged, which means the debtor’s liability for those debts is eliminated. People sometimes need to utilize Chapter 13 bankruptcy more than once. Assuming all other filing requirements are met, debtors who have received a Chapter 13 discharge will become eligible for:
- Another Chapter 13 discharge two years from when the previous Chapter 13 case was filed
- A Chapter 7 discharge six years from when the previous Chapter 13 case was filed if unsecured creditors were paid less than70 percent through the Chapter 13 repayment plan, or immediately if unsecured creditors were paid more than 70 percent
A qualified bankruptcy attorney can help you time the filing of your subsequent Chapter 13 or Chapter 7 bankruptcy case so as to ensure you are not denied a discharge for filing again too soon. If you are thinking about filing bankruptcy, especially if you have filed in the past, contact an experienced Kansas City bankruptcy lawyer today.