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How Often Can I File For Bankruptcy?

While the vast majority of my clients have never been involved in a bankruptcy before coming to see me, the current state of the economy does cause some people to re-visit bankruptcy.  Lately, I have had some potential filers come to me asking whether a prior filing will bar them from filing again.  A simple, though terribly disingenuous answer to the question is that there is no restriction whatsoever.  However, that is not really a correct answer to the underlying question.  The ultimate goal for most individual bankruptcy filers (as opposed to corporate filers) is to get a discharge of their debts, and virtually all bankruptcy filers want (at the very least) the benefit the automatic stay afforded under the bankruptcy code.  So, while previous filings do not bar anyone from filing a new bankruptcy case, the benefits of bankruptcy are limited by the bankruptcy code.

Debtors seeking a discharge under Chapter 7 of the Bankruptcy Code are only able to receive the discharge if they have not filed another Chapter 7 case (or a Chapter 11 case) that resulted in a discharge in the past eight years.  Similarly, they must not have filed a Chapter 13 (or a Chapter 12) case that resulted in a discharge in the past six years.  It is important to note that the pertinent date is the date the previous bankruptcy was FILED rather than the date of the discharge.  This is particularly important in the context of a previous Chapter 13 case where the discharge is often five years after the Chapter 13 petition was filed.

Debtors seeking a discharge under Chapter 13 of the Bankruptcy Code are only able to receive the discharge if they have not filed another Chapter 7, Chapter 11 or Chapter 12 case that resulted in a discharge in the past four years or two years if the previous Bankruptcy case was a Chapter 13 case.

Individual debtors seeking a discharge under Chapter 11 of the Bankruptcy Code must not have received a discharge in a Chapter 7 or prior Chapter 11 case commenced in the past eight years, or a Chapter 13 case filed in the past six years.

The idea of the restrictions is to restrict how often Debtors are able to discharge their debts.  But what about cases filed which did not ultimately result in a discharge?  What about cases that were dismissed prior to reaching the discharge?

As you might expect, where no discharge was reached, the prospective Debtor faces somewhat fewer restrictions.  Although, it should be noted that many Debtors whose cases have been dismissed for one reason or another may face a greater need to “try again”.   The restriction for these Debtors revolve around the automatic stay.

The automatic stay is limited for individuals (or joint) debtors who file a Chapter 7, 11 or 13 case during the one-year period after another Chapter 7, 11 or 13 case was pending, but the case was dismissed.  In these cases the court presumes that the Debtor’s subsequent filing lacks good faith, and the automatic stay is in place for only 30 days.  The 30-day limit on the automatic stay can be extended, but only upon a positive showing by the Debtor that the later case is in good faith as to the creditors effected.

Further, in cases in which there are more than one previous bankruptcy case pending in the previous year for an individual (or joint) Debtor but were dismissed, the automatic stay does not go into effect upon filing the petition at all!  In fact, in those cases, “on request of a party in interest [i.e., a creditor], the court shall promptly enter an order confirming that no stay is in effect[.]” 11 U.S.C. s.362(c)(4)(A) (emphasis added).  The Debtor may move the court to enter a stay as to some or all creditors, but in this case no stay is in effect unless the court finds good faith in the later case.

The purpose of the restrictions is to limit multiple filers who might, for instance, file case after case in an attempt to delay a creditor (particularly secured creditors such as a mortgagee) from exercising its rights (such as foreclosure) with no real likelihood or even goal of readjusting or reorganizing debts.

The bottom line is there are real consequences for those who might attempt to file a bankruptcy without a real plan or without the assistance of knowledgeable counsel.  The bankruptcy code does not let a Debtor simply try and try again to get it right, and mistakes could result serious consequences for the Debtor, including loss of a home.  If you are considering bankruptcy you should seek the advice of an experienced bankruptcy attorney.  To schedule a no-cost, no-obligation consultation with an attorney concentrating in bankruptcy law call the Law Offices of James Wingfield today at 508-797-0200 or visit the contact page on our website.

One Response to How Often Can I File For Bankruptcy?

The Law Offices of James Wingfield is proud to be a debt relief agency. We help the individuals, families and small businesses of the Worcester area file for bankruptcy relief under the United States Bankruptcy Code. The Law Offices of James Wingfield serves Central and Western Massachusetts clients in Worcester County, Hampden County, Hampshire County and Middlesex County including Worcester, Shrewsbury, Springfield, Westborough, Southborough, Framingham, Northampton, Natick, Amherst, Fitchburg, Leomister, Douglas, Uxbridge, Gardner, Belchertown, Holyoke, Wilbraham and Chicopee. The information contained and obtained in this website does not, nor is it intended to be, legal advice. Contacting us, be it through this website, via email of by telephone does not create an attorney-client relationship. An attorney-client relationship is only created upon execution of an engagement agreement or fee agreement.