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Filing for Bankruptcy a Second Time

Posted on in Bankruptcy Attorney
Filing for Bankruptcy a Second Time

When you are struggling with an uncontrollable level of personal debt, filing for bankruptcy is not an ideal outcome. However, it is sometimes the best outcome for your situation because it allows you to make the lifestyle changes you need to make to regain control over your finances and negotiate a fair settlement with your creditors. Whether you file for Chapter 7 or Chapter 13 bankruptcy, you will work closely with the court to ensure that your rights are protected and your debts are paid.

But new emergencies can strike and old habits die hard. It is not unheard of for an individual to find him or herself bankrupt for a second or subsequent time in his or her life. If you find yourself in this situation, know that there is a minimum time limit between discharges you can receive. In other words, if you filed for bankruptcy the first time fairly recently, you might be barred from receiving a discharge until a certain amount of time passes. Do not confuse this with a time limit on filing for bankruptcy again – you can do this at any time. But if you cannot receive a debt discharge, the second or subsequent bankruptcy could be useless.

The Chapter Determines the Time Limit

Individuals struggling with personal debt have the option to file for Chapter 7 or Chapter 13 bankruptcy. The chapter of your first bankruptcy determines the time limit you face for your second one.

If your first bankruptcy was Chapter 7 and you want to file for Chapter 7 a second time, eight years must pass before you can receive a discharge. If you are seeking a second Chapter 13 bankruptcy, two years must pass before you can receive a discharge.

When you opt to file for a different chapter the second time, the rules governing your bankruptcy can become more complicated. These rules include:

  • If you are seeking a Chapter 7 bankruptcy after a previous Chapter 13 bankruptcy, six years must pass before you can receive a discharge unless you paid off all of your debt under the first plan or you paid at least 70% of your debt and the first plan was otherwise proposed and progressed in good faith.
  • If you file for Chapter 7 bankruptcy after a successful Chapter 13 case, you must wait four years to receive a discharge. This can become more complicated if you file your second claim four to eight years after the first and the first is not confirmed by the court. When this happens, it is possible to convert the first bankruptcy into a Chapter 7 claim, but the rules listed above for a subsequent Chapter 7 bankruptcy apply.

Work with a Chicago Bankruptcy Attorney

If you are reaching the point with your debt that you are considering filing for bankruptcy a second time, discuss your options with an experienced bankruptcy attorney. Contact our team of experienced Chicago bankruptcy attorneys at Newland & Newland, LLP today to schedule your initial legal consultation with a member of our firm. We are located in Suite 3700 of the prestigious 180 North LaSalle street building in Chicago.

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