If you’ve ever filed for bankruptcy before please tell me right away. There can be problems if you’ve filed before. Some of these problems are solved simply by waiting to file again. Here are some of the issues:
If you’ve filed a case and it was dismissed within the last year then your stay only lasts 30 days. If you want to try to get the stay to last longer than 30 days then you have to file a motion with the court, within that 30 day period, showing that your recent case was filed in good faith.
If you’ve had 2 or more cases dismissed within the last year then if you file a third time there will be no automatic stay. Here again, you can file a motion within 30 days to try to convince the court that your bankruptcy filing is in good faith and get a stay.
If you’ve filed a bankruptcy case in the last 180 days and the court dismissed your case because of a “willful failure to abide by the orders of the court or to appear before the court in proper prosecution of the case” then you are not allowed to file for bankruptcy.
When you file a petition for bankruptcy the clerk has no way to know if your previous case was dismissed for a “willful failure to abide…”. Therefore, ordinarily, if you’ve had your case dismissed within the last 180 days the court will accept your filing. It is then up to some party to file a motion asking the court to dismiss your case.
If you have filed a bankruptcy within the last 8 years and received a discharge then you will not receive a discharge.
Keep in mind that these rules only apply to the individuals that have filed a previous bankruptcy.
If your spouse wasn’t part of the prior bankruptcy then these rules don’t apply to him or her.
Occasionally a client will suggest the following:
1. That we file a chapter 7 and discharge all the unsecured debts.
2. Then, shortly thereafter, we file a chapter 13 in order to lienstrip the secured debts that have become unsecured due to a drop in property values.
The client is thinking that, by using this technique, the unsecured debts would be completely discharged in the chapter 7 whereas if only a chapter 13 were filed then the unsecured debts would only be partially discharged. The client is thinking he can file a chapter 13, lien strip, partially pay off the stripped of liens and discharge the unpaid balances at the end of the chapter 13 plan.
The problem is that under the 2005 amendments to the bankruptcy code you can not receive a discharge in a chapter 13 if you receive a discharge in a prior chapter 7 that was filed within 4 years of filing the chapter 13. Therefore you would have to wait 4 years after you file the chapter 7 to file the chapter 13 if you want to discharge the stripped off liens. Most people can not wait this long.
But there are circumstances where this technique (filing chapter 7 and then chapter 13) make sense. For example, if you don’t need a discharge in the chapter 13 because all you want to do is pay off the arrearage in your 3 or 5 year chapter 13 plan then the technique could be helpful.
This technique may also be helpful for people that have very high monthly payments on student loans. The debtor may have tried to negotiate with the student loan lender to get the monthly payments reduced but the lender refuses and has garnished the debtor’s wages. The debtor can’t pay his bills and survive.
The debtor may consider discharging all the unsecured debts in a chapter 7.
After the chapter 7 discharge, he still owes the student loans and the high payments resume. He can then consider filing a chapter 13 to get the payments lowered as part of the chapter 13 plan.
After the plan ends (in either 3 or 5 years) the high monthly payments resume.
The debtor can then file another chapter 13 to get the payments reduced during the life of that plan. After that, he can file another. And another, etc.