Americans have a right to declare bankruptcy. Article I, Section 8 of the Constitution provides Congress with the power to enact “uniform Laws on the subject of Bankruptcies.” The right to declare bankruptcy provides Americans with important individual and community benefits, such as the ability to shed overly burdensome debt or the freedom to start a business without fear that a failed commercial endeavor will destroy their personal financial life.
Bankruptcy is also a privilege, however. In order to protect creditors from a debtor’s inaccurate, misleading, untimely, or unfair claims, federal and state laws provide a number of limitations on how a debtor can declare bankruptcy. For instance, creditors are benefited by the fact that only some kinds of debt are dischargeable, some types of debt receive greater protection, and federal courts and executive branch officials police the bankruptcy process, guarding against debtor abuse.
One of the most important limitations on a debtor’s ability to declare bankruptcy is a rule that prohibits individuals from declaring bankruptcy on multiple occasions during a specified period of time. Specifically, a Chapter 7 debtor cannot receive a second discharge of debt if he or she filed within eight years prior to a previous Chapter 7 discharge or, generally speaking, within six years of a Chapter 13 discharge.
What does this mean for you? It means that when considering their bankruptcy options, Chapter 7 debtors need to “get it right the first time.” Which debts you declare, which ones you assume, when you declare, and what kind of plan you have for your financial life after your bankruptcy are important considerations.
The attorneys at Fears Nachawati can help you sort through these challenging bankruptcy issues. With years of experience and dedicated expertise, we know how to advise you. Contact us today for your free consultation and to understand the best way to move forward. We’re ready to give you the help you need.