With our country still in the midst of the “Great Recession,” it is becoming more common for people to find themselves in need of additional bankruptcy protection long after an initial filing. The highly publicized 2005 amendments to the United States’ bankruptcy laws (known as the Bankruptcy Abuse Prevention and Consumer Protection Act or “BAPCPA”) changed the way in which subsequent bankruptcy filings were handled in an attempt to prevent so-called “serial bankruptcies.” It is still possible for an individual to seek a second or even third bankruptcy, but there is a mandatory waiting period.
Subsequent Chapter 7 Bankruptcy
Another thing the BAPCPA did was make it more difficult for people to file a Chapter 7 bankruptcy by requiring a means test. Those who didn’t pass the means test were still allowed to file for bankruptcy protection, but under Chapter 13 of the bankruptcy code. For those able to successfully file a Chapter 7 filing the first time around and receive a discharge, a second Chapter 7 application can be filed only after an eight-year period has elapsed from the date of the first filing. If the first filing was a Chapter 13, however, the filer must wait six years before seeking Chapter 7 protection.
Subsequent Chapter 13 Bankruptcy
Under the prior law, there was no bar on the ability of a debtor to obtain a Chapter 13 discharge after a prior discharge. Under the BAPCPA, there is still no restriction on the filing of a Chapter 13 discharge after a prior discharge, however, the BAPCPA does impose time limits on obtaining a Chapter 13 discharge when the case was filed after a prior discharge. A discharge cannot be given under Chapter 13 if the filer received a prior Chapter 7 discharge within four years of the filing of the new Chapter 13 case.
A discharge also cannot be entered in a Chapter 13 case if the person received a discharge in a prior Chapter 13 case within two years of the date of the filing of the new Chapter 13. If a previous filing was dismissed, though, it doesn’t count against the filer, and there is no additional waiting time required.
Other Important Time Constraints
It is still possible for a person to file a case even if a discharge cannot be granted, and it may still be advantageous to the filer to seek bankruptcy protection even if the filing does not result in a discharge of all debts.
Recent changes in the law limit the effect of one of the most important aspects of a bankruptcy filing, the automatic stay. Once a bankruptcy is filed, creditors are prevented from seeking to recover the debt for an indeterminate period known as the automatic stay. For “serial filers,” — those who have had a bankruptcy discharged or dismissed in the previous year — the automatic stay is generally limited to only 30 days, but can be extended at the discretion of the bankruptcy court. If there have been two discharged or dismissed filings in the prior year, the protections of the automatic stay are unavailable.
Bankruptcy laws are both complex and confusing; if you or a loved one has questions about a first or second filing, seek the help of a skilled bankruptcy attorney in your area.