If I Had a Prior Chapter 7 or Chapter 13 Bankruptcy, Can I File a New Bankruptcy Case?
The answer to that is a definite “maybe.”
Timing is everything in this. It is vital to get the timing right or a new bankruptcy filing can quickly turn into a nightmare with disastrous results. Below is a basic explanation of the timing rules for being able to get a discharge in a new case. We will also cover when it is good to file a bankruptcy, even though you may not be able to get a discharge of your debts.
Filing a Chapter 7 Bankruptcy After a Prior Chapter 7 Discharge
The first thing you need to know is the filing date of your prior Chapter 7 bankruptcy. This is the starting date of 8 years where you are unable to file a new Chapter 7 and get a Chapter 7 discharge of your debts.
Interestingly, you can file a new Chapter 7 bankruptcy within that 8 year period. The Bankruptcy Code does not prohibit a filing. It just means that you cannot get a new discharge of debts. 11 U. S. Code §727(a)(8).
Why would you want to file a Chapter 7 Bankruptcy if you cannot get a discharge? If you have a creditor that is going to take something you have, you can still protect what they were going to take, at last temporarily. It gives you or the Bankruptcy Trustee time to sell the asset for closer to the asset’s actual value.
For example, if you have a lender that is foreclosing on your home and you are going to lose the equity if that happens, a Chapter 7 will stop the foreclosure sale. Then you may be able to sell the home, with the permission of the bankruptcy Court, for more money than you would have received had the creditor foreclosed.
Another reason you may want to file a Chapter 7 Bankruptcy is that you want the money to go to a “priority debts.” These may be taxes and back support debts that you cannot eliminate in or out of bankruptcy. Better for the money to go where it best helps you rather than going to an ordinary creditor.
Filing Chapter 13 After a Chapter 7 Discharge
If you had obtained a discharge in a Chapter 7 bankruptcy in the last 4 years, you cannot get a new discharge in a Chapter 13 case (11U.S.Code §1328(f)(1)) However, you can still use a Chapter 13 to control debts.
Often referred to as a “Chapter 20,” you can use Chapter 13 to control debts that survive a Chapter 7 discharge or are in need of being controlled. (7+13 = 20) This is often taxes, debts for vehicles furniture and appliances, and back mortgage payments.
In a so-called “Chapter 20” you can sometimes even wipe out a “junior mortgage” such as a Second Deed of Trust. This is referred to as “lien stripping.” You can do that in a Chapter 13 bankruptcy. You cannot do it a Chapter 7 bankruptcy.
If it has been more than 4 years since you filed a Chapter 7 Bankruptcy, you can discharge debts in a Chapter 13 bankruptcy that you could not do if you filed a new Chapter 7 bankruptcy.
Filing a New Chapter 13 Bankruptcy After Prior Chapter 13 Bankruptcy Discharge
If you filed a Chapter 13 bankruptcy in the last 2 years and you received a discharge, you cannot get a Chapter 13 discharge in a new Chapter 13 case. (11 U. S. Code §1328(f)(2). You can get a discharge in a new Chapter 13 bankruptcy only if it has been more than 2 years since you filed the first Chapter 13 Bankruptcy.
Filing Chapter 7 Bankruptcy After a Prior Chapter 13 Discharge
The good news is there are two exception to this.
The first is that the Chapter 13 bankruptcy plan paid all the “general unsecured claims” in full. Examples of “general unsecured claims” would include debts like personal loans, credit cards, signature loans and medical bills.
The other exception is if: 1.) you paid at least 70% to the filed “general unsecured claims” in your prior Chapter 13 case; 2.) your prior Chapter 13 bankruptcy case is filed in “good faith” and 3.) the prior Chapter 13 plan is your best effort. (11 U. S. Code §727(a)(9)).
If You Had a Prior Bankruptcy Cases Filed in The Last 8 Years, See a Bankruptcy Specialist.
This is complicated. Without a bankruptcy attorney, it is easy to do the wrong thing and get yourself in trouble. Many bankruptcy attorneys do not understand the rules about prior bankruptcy filings beyond the “8 year” rule on filing a new Chapter 7 bankruptcy.
You need a bankruptcy attorney that knows these time limitations to filing for a new bankruptcy case if you are going to have a successful outcome. My recommendation is that you contact an experienced bankruptcy law specialist in your area.
Gary Ray Fraley is a California State Bar Board of Specialization Certified Bankruptcy Law Specialist with more than 37 years of experience in bankruptcy law. His Bankruptcy Law Office is located at 1401 El Camino Avenue, Suite 370, Sacramento California 95815. You can call his law office at (916) 485-5444. You can see more about Mr. Fraley and your options at his website: SacramentoBankruptcyAttorneys.com