The Bankruptcy Code and courts provide several different avenues for relief from debt through bankruptcy. Each avenue provides a different result, or a different type of relief.
For some, only a restructuring or reorganization is needed. Others need entire debts extinguished in order to begin fresh. In addition to differences in relief, there are also difference in time limitations on filing bankruptcy for those that have previously filed a bankruptcy petition.
Time That Must Pass Between a First and Second Bankruptcy Filing
If a person has already filed a bankruptcy petition, the court will not permit filing again until a certain amount of time has passed.
The court will deny a discharge in a later chapter 7 case if the debtor received a discharge under chapter 7 or chapter 11 in a case filed within eight years before the second petition is filed.
The court will also deny a chapter 7 discharge if the debtor previously received a discharge in a chapter 12 or chapter 13 case filed within six years before the date of the filing of the second case unless either of the following occurred:
- (1) the debtor paid all “allowed unsecured” claims in the earlier case in full, or
- (2) the debtor made payments under the plan in the earlier case totaling at least 70 percent of the allowed unsecured claims and the debtor’s plan was proposed in good faith and the payments represented the debtor’s best effort.
A debtor is ineligible for discharge under chapter 13 if he or she received a prior discharge in a chapter 7, 11, or 12 case filed four years before the current case or in a chapter 13 case filed two years before the current case.
Consider Your Debts
As you can imagine, a person with little debt that may be able to pull himself or herself out of debt without bankruptcy will be less likely to file bankruptcy immediately than a person with lots of debt that will never be able to repay all debts. Both may feel hopeless and both may be considering bankruptcy.
A person with little debt that is behind in payments will place greater importance on the person’s inability to file for bankruptcy a second time for a period of years. A person with mountains of debt, on the other hand, will place later emphasis on the second filing time limitations because, despite those limitations, the person currently has no other alternative.
For one person , it may be worth a try to repay debts, even if he or she ultimately ends up unable. For the other person, he or she simply doesn’t have this option.