When Can I File Chapter 7 for a Second Time?

No one grows up looking forward to bankruptcy, financial problems, dealing with lawyers or participating in court cases. Certainly, no one wants to file Chapter 7 a second time, repeating the process again under strict court scrutiny. Nevertheless, life has a way of intervening, and sometimes filing again is the best path to financial recovery.

The U.S. Code limits how often debtors may receive a discharge. If you asked the question, can I file for chapter 7 a second time, then you should take notice of three different requirements. If you received a Chapter 7 discharge within the last eight years, you must wait. If you received a Chapter 13 discharge during the last six years, and paid less than 70% of all unsecured claims, you must wait. If you had a case dismissed with prejudice during the last 180 days, you must wait.

In most cases, prejudice results from some type of abuse of the legal process. Examples of prejudice include perjury, false statements, hiding assets, or some other intentional conduct that violates court procedures. Pass the three requirements, and you are free to file a second time.

According to the U.S. Department of Justice, fewer than 3% of people who file bankruptcy re-file a second time. In contrast, approximately 10% of the general population files at some point over the course of a lifetime. The three most likely reasons forcing people to file are medical expenses, divorce, and job loss. Further, according to a joint study conducting by major credit card providers, abusive spending habits cause less than 5% of total cases filed.

Perhaps the greatest challenge for anyone who considers bankruptcy is the restrictions on transactions during the two years before filing a petition. Certain transactions are illegal, while other similar transactions remain safe to accomplish the same result. Often, debtors, creditors and courts disagree on the thin line between bankruptcy abuses and allowed pre-bankruptcy preparation. Timing is critical for success. If you file for bankruptcy for free (without a lawyer) you must consider legal requirements yourself.

With enough time, almost anyone can keep all assets and discharge all debts. In Chapter 7 cases, you can discharge debts completely. In Chapter 13 cases, you must make at partial payment on all debts. To satisfy this requirement, you may pay as little as 3% of the total amount owed and discharge the remaining balance when the plan is complete.

The means test determines if you qualify to file Chapter 7 and determines the payment required in Chapter 13. If you earn more than your state’s median income, you cannot file Chapter 7. If you do not currently receive income, you cannot file Chapter 13. For example, if you lost your job within the last 30 days, you may not qualify for either chapter. Nevertheless, you have options. Using creative bankruptcy strategies, you can file safely and legally with proper preparation.

Anyone who considers filing bankruptcy should familiarize him or herself with all options and alternatives, before filing. This preparation should be complete before talking to an attorney. In this way, you can use your free initial consultation effectively, and ask the right questions at the right time.

Dave Clark is a lawyer who writes often about U.S. bankruptcy strategies. A few of his 5,000 past clients inquired, can I file for Chapter 7 a second time when I want, and satisfy the court? Yes, within limits, and his definitive his articles explain how you too could re-file safely.