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Navigating the Bankruptcy Maze: How Often Can You File for Consumer Bankruptcy?

Picture of a petition for Chapter 13 bankruptcy

Bankruptcy is often seen as a financial lifeline for individuals facing overwhelming debt. While it can provide a fresh start, there are rules in place to prevent abuse of the system. One of the most common questions people ask is, “How often can a person file for consumer bankruptcy?” In this article, we’ll delve into the specifics of consumer bankruptcy eligibility and waiting periods for both Chapter 7 and Chapter 13 filings.

Types of Consumer Bankruptcy: Understanding Consumer Bankruptcy

Before we dive into the waiting periods, it’s essential to understand the two primary types of consumer bankruptcy:  

Chapter 7 Bankruptcy Overview

This type of bankruptcy can involve the liquidation of non-exempt assets to pay off debts, with the remaining debts discharged.  But if there are no non-exempt assets then a Chapter 7 Bankruptcy will eliminate and discharge unsecured debts such as credit cards, medical bills, and personal loans.

Chapter 13 BankruptcyOverview 

This bankruptcy allows individuals with a regular income to create a structured repayment plan over three to five years. Many times, the Bankruptcy will allow you to pay back missed mortgage and vehicle payments. 

Eligibility Criteria for Filing Consumer Bankruptcy:  Meeting Eligibility Requirements

Eligibility for bankruptcy varies based on income, financial circumstances, and past bankruptcy filings. Here’s a brief overview of the basic requirements:

Chapter 7 Bankruptcy: Chapter 7 Eligibility

To file for Chapter 7, you must pass a MEANS test, which compares your income to the state median income. If your income is below this threshold, you’re generally eligible for Chapter 7 so long as your household is running a negative monthly budget. 

Chapter 13 Bankruptcy:  Chapter 13 Eligibility

For Chapter 13, you must have a stable income to propose a repayment plan. 

Filing Chapter 7 Following a Prior Chapter 7 Discharge (After 8 Years):

To initiate a Chapter 7 bankruptcy case following a previous Chapter 7 discharge, you must observe an eight-year waiting period from the date of your previous filing. Filing before this eight-year interval elapses will result in an absence of discharge. The countdown for these eight years commences on the date of your previous Chapter 7 bankruptcy filing.

Filing Chapter 13 After a Chapter 7 Discharge (After 4 Years):

Should you require another Chapter 13 bankruptcy filing after being discharged from a prior Chapter 7 case, you must wait at least four years from the date of the previous petition to secure a complete discharge of your personal loans, medical bills, and credit card debts. Filing prior to the completion of these four years will exclude your unsecured debts from discharge. This timeframe applies only if you received a discharge (as opposed to a dismissal) in your prior Chapter 7 filing.

Filing Chapter 7 After a Chapter 13 Discharge (After 6 Years):

If you initially filed for Chapter 13 bankruptcy, received a discharge, and now seek Chapter 7 bankruptcy relief, a waiting period of six years from the date of your Chapter 13 case filing is mandatory for a full discharge. Filing before these six years elapse necessitates having paid at least 70% of your unsecured creditors’ balances during the Chapter 13 repayment plan. Failure to meet this requirement when filing for Chapter 7 within six years of your Chapter 13 case will result in an absence of debt discharge.

Filing Chapter 13 Following a Prior Chapter 13 Discharge (After 2 Years):

In the event of a Chapter 13 filing culminating in a discharge and a subsequent need to refile Chapter 13, a minimum two-year waiting period is obligatory from the date of the prior case’s filing. Initiating the filing within two years of the previous case will not entitle you to a discharge of debts in the new bankruptcy case.

Timing Your Bankruptcy Filing

Timing is crucial when it comes to bankruptcy. Waiting periods are strict, and if you file prematurely, you risk your case being dismissed. It’s always a good idea to consult with a qualified bankruptcy attorney who can guide you through the process and help you determine the best course of action.

Contact An Experienced Bankruptcy Attorney Today!

Bankruptcy is a complex legal process, and understanding the waiting periods is essential. While the rules can be stringent, they are in place to maintain the integrity of the bankruptcy system. If you’re considering filing for consumer bankruptcy, it’s vital to stay informed and seek professional guidance to make the right decision for your financial future. At Brenner Spiller & Archer, we have extensive experience with Consumer Bankruptcy Law and offer a free consultation.  Contact us online today to learn more or call us directly at 856-963-5000.

​​The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.