The timing rules about when you can file a new bankruptcy after having filed a previous one only apply if you got a discharge of your debts in that prior case. The rules also only apply if you intend to get a discharge in your new case as well. If there’s no discharge of debts on either end, you can file the new case at any time.
Our last blog was about the period of time a person has to wait after filing a previous bankruptcy case to file a new one. It focused on the fact that a huge rush of people filed bankruptcy in 2005 because of major overhaul of the Bankruptcy Code effective that October, and that virtually all those people would be eligible to file again—now or within a few months, based on the timing rules.
The waiting period is 2, 4, 6 or 8 years, depending both on the Chapter under which the previous bankruptcy was filed and the Chapter under which the new one is being filed. The applicable waiting period begins to run as of the previous case’s filing date, and needs to pass before the new case’s filing date.
Focus of the Timing Rules Only on Bankruptcies Resulting in a “Discharge”
Although the date that triggers the start of these waiting periods is the previous case’s filing date, NOT the date the discharge of debts was entered by the court, these waiting periods don’t even apply unless BOTH the previous bankruptcy case resulted in a discharge of your debts AND the new case is intended to result in a discharge of your new debts. This is important because you may be able to file without any waiting IF no discharge was entered in your previous case. And even if you did get a discharge in that previous case, you can file without waiting if you do not need a discharge in your new case.
To make better sense of this, let’s look at both ends of this, starting with the discharge being entered in the previous case.
Without a Discharge in the Previous Case, You Can File a New Bankruptcy at Any Time
To be clear, “discharge” is the legal write-off of debts through bankruptcy. It’s usually the main reason, but often not the only reason, that you’d file bankruptcy.
If in the past you filed a personal bankruptcy—whether it was a Chapter 7 “straight” bankruptcy or a Chapter 13 “adjustment of debts” payment plan—and your recollection is that you finished it successfully, it’s extremely likely that you received a discharge of your debts in that case. You and your creditors would have gotten an order from the bankruptcy court stating that your debts were discharged. If you don’t remember, and/or don’t have your paperwork from back then, your new attorney will likely be able to find out whether or not your debts were discharged.
So the odds are high that you got a discharge, but it’s worth making sure. Sometimes something seemingly minor can derail a case. Way back then you might not have noticed that you had gotten a “dismissal” of your case from the court instead of a “discharge.” And sometimes creditors don’t even notice and don’t resume pursuing you for the debts. So if you have any doubt about this, and did not hang onto the court documents to make sure, either contact your previous attorney or go see a new one to find out when you can file a new case.
If You Don’t Intend to Get a Discharge in your New Case, You Can File It at Any Time
Why would a person ever file a bankruptcy without getting a discharge of their debts? We just mentioned above that usually getting a discharge is the main reason that a person files. But there can be other reasons, the main other one being to stop your creditors from taking action against you and/or your assets. Chapter 13 can be especially helpful in this respect because it can protect you for years, particularly from special, otherwise potentially very aggressive creditors.
This is best explained by an example. Assume that you filed a Chapter 7 case just two years ago when you owed $3,500 in income taxes that you knew would not be discharged. But as intended, you made arrangements with the IRS to take care of the taxes through monthly payments. But during the intervening two years your income has gone down, preventing you from being able to make the monthly IRS payments, and you’ve added another $2,500 of income tax debt for the most recent tax year (from underwithholding or not paying enough estimated quarterly taxes), PLUS you’ve fallen behind $2,000 on your monthly child support. The IRS is threatening to garnish your business and personal checking accounts, and support enforcement is threatening to suspend your driver’s license.
You would normally need to wait four years from the filing of your earlier Chapter 7 case to the filing of a new Chapter 13 case, but that’s still two years away and you need relief now. But waiting period only applies if you needed a new discharge of your debts. But neither the taxes nor the support can be discharged in bankruptcy, so a discharge is not what you need. Instead what you need is protection from the garnishment and license suspension, along with a payment schedule consistent with your present financial circumstances, both of which a new Chapter 13 would likely provide you. So in this situation you could file a Chapter 13 case, only two years after filing a Chapter 7 case, or for that matter at any time after completing that Chapter 7 case.
So, don’t assume that the time restrictions on filing necessarily apply to you. If you filed a previous bankruptcy case and now need more help, discuss your situation with a qualified and experienced bankruptcy lawyer in your area.