The federal bankruptcy law does not limit the number of times an individual can file for bankruptcy protection. The Bankruptcy Code only restricts how often a debtor may receive a discharge of debts. When an individual is facing overwhelming debt and needs relief from creditors, the bankruptcy laws provide powerful protection. In some cases that protection can be a discharge of debt; in other cases, it means an opportunity to repay what is owed, or just time to negotiate with a creditor.
An individual may file multiple bankruptcies for many reasons; a discharge is not the only benefit of proceeding with a Chapter 7 bankruptcy. When a discharge of debt is needed, the federal law limits time between discharges:
1. After receiving a discharge in a previous Chapter 7 bankruptcy case, the debtor must wait eight (8) years before he is eligible to receive another Chapter 7 discharge. See 11 U.S.C. § 727(a)(8).
2. After receiving a discharge in a previous Chapter 7 bankruptcy case, the debtor must wait four (4) years before he is eligible to receive a Chapter 13 discharge. See 11 U.S.C. § 1328(f)(1).
3. After receiving a discharge in a previous Chapter 13 bankruptcy case, the debtor must wait six (6) years before he is eligible to receive a Chapter 7 discharge. See 11 U.S.C. § 727(a)(9).
4. After receiving a discharge in a previous Chapter 13 bankruptcy case, the debtor must wait two (2) years before he is eligible to receive a Chapter 13 discharge. See 11 U.S.C. § 1328(f)(2).
These restrictions are not statutes of limitations nor make the debtor ineligible to file for bankruptcy protection. Neither does an intervening bankruptcy toll the waiting period.
The above time periods are measured from the date the previous case was filed, and are not measured from the discharge date. For instance, if a Chapter 7 bankruptcy is filed (and subsequently discharged) on June 1, 2005, then:
1. on June 1, 2013 the debtor will be eligible to file a Chapter 7 bankruptcy case and receive a discharge (the Eight Year Rule); and
2. on June 1, 2009 the debtor is eligible to file a Chapter 13 bankruptcy and receive a discharge (the Four Year Rule).
A debtor’s ineligibility to receive a discharge does not prevent the debtor from filing a new bankruptcy case. In some cases a discharge is not needed. A debtor can file a Chapter 13 bankruptcy and repay debts without receiving a discharge. In this situation there is no legal limitation between bankruptcy cases. This strategy is especially useful when faced with nondischargeable debts that must be fully paid. The obligation can be paid over time under the supervision and protection of the bankruptcy court. In some rare cases of abuse a bankruptcy court may deny the debtor relief. This can occur when a debtor has shown a history of repeated bankruptcy filings that have been dismissed (called a “serial filer”).
If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to firstname.lastname@example.org.