Understanding Bankruptcy, 4/18/2019

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Question: How many times can you file Chapter 7 bankruptcy?

Chapter 7 exists to help you get out of debt quickly and easily. Tally up your bills, make sure you pass the means test, account for any non-exempt assets, and away you go. An experienced bankruptcy lawyer can help get you into a better position relatively fast.

To paraphrase Mark Twain, it’s easy to file for Chapter 7 bankruptcy – you can do it hundreds of times. The real question, however, is whether you can get what you want – a discharge of debts – when your case is filed.

As we’ve said in these virtual pages in the past, there’s no limit on the number of times you can file for Chapter 7 bankruptcy. Nor is there a time limit between filings. You can file as often and as many times as you like.

There are, however, limits on how often you can get a discharge. Under the U.S. Bankruptcy Code, you must wait eight years from the time you first filed Chapter 7 until you can get a second Chapter 7 discharge.

If it is too soon to get another Chapter 7 discharge, an option is to file Chapter 13. You are eligible for a discharge in Chapter 13 as soon as four years after filing Chapter 7.

Filing Chapter 13 can help you reorganize your finances and repay debts over a 3-5 year period depending on your financial situation. Though you’ll be required to repay a portion of your debts through the Chapter 13, it’s better than being enslaved to overdue bills.

There are, however, some occasions when filing a Chapter 7 is a good idea even if you don’t qualify to receive a discharge. For example, if you’ve got a large non-exempt asset and don’t want to be bothered with selling it off to pay your debts individually, then Chapter 7 may work for you. Other times you’ve got a lawsuit pending and simply need the benefit of the automatic stay while the recovery is worked out.

There are a lot of details, to be sure. But the bottom line is that not only can you file Chapter 7 bankruptcy more than once – you may want to do so even in the absence of the availability of a discharge.

Next Week’s Question: What are some bankruptcy modification myths?
Michael A. Cibik, Esquire

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