Bankruptcy is a legal process designed to help individuals and businesses overcome overwhelming financial difficulties by providing a fresh start. For individuals, the two most common forms of bankruptcy are Chapter 7 and Chapter 13. While these chapters serve similar purposes, they differ in their approach towards debt resolution and in their allowance of second and subsequent filings.
Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, involves the sale of a debtor’s non-exempt assets to repay creditors. The discharge of remaining eligible debts typically occurs within a few months after filing. The Bankruptcy Code imposes certain restrictions on filing a subsequent Chapter 7 case.
Under Section 727(a)(8) of the Bankruptcy Code, you cannot receive a Chapter 7 discharge if you received a discharge in a Chapter 7 case filed within eight years before the current petition date. This means you must wait for eight years from the first filing date before filing another Chapter 7 case to receive a discharge.
Chapter 13 bankruptcy, also known as reorganization bankruptcy, involves the creation of a repayment plan to satisfy creditors over a three- to five-year period.
Under Section 1328(f) of the Bankruptcy Code, you cannot receive a Chapter 13 discharge if you obtained a discharge in a previous Chapter 13 case filed within two years before the current petition date. While there is no strict waiting period for filing a second Chapter 13 case, you may not be eligible for a discharge if you file again too soon.
The time limits vary if the second filing is under a different bankruptcy chapter than the first filing. If you originally filed under Chapter 7, you need to wait four years before filing a Chapter 13 case. If you originally filed under Chapter 13, you usually must wait six years to file a Chapter 7 case. In the latter case, however, the waiting period may be shorter if you paid at least 70 percent of what was due to unsecured creditors under the original Chapter 13 plan and did so in good faith.
If you are contemplating a second bankruptcy filing, you should carefully consider your options with the guidance of an experienced bankruptcy attorney who can fully analyze your eligibility criteria under Chapter 7 or Chapter 13. Filing bankruptcy cases too close together may be viewed as an abuse of the system and can result in denial of the automatic stay that normally attaches when you file. Also bear in mind that filing bankruptcy more than once can have a greater negative impact on your credit history than a single bankruptcy.
Jeff Field & Associates represents clients throughout Georgia in bankruptcy matters, including second filings. We have offices in Scottdale, Gainesville, Marietta, Lawrenceville, Douglasville and Athens. To schedule an appointment, call us at 404-381-1278 or contact us online.
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