How soon can debtors file a second bankruptcy?

On Behalf of | Aug 26, 2021 | Chapter 13 Bankruptcy, Chapter 7 Bankruptcy |

Consumers in Raleigh, North Carolina, may turn to bankruptcy when faced with debt that has gotten out of control. For some people, an unexpected pileup of debt happens more than once. Individuals may wonder if they are allowed to refile for bankruptcy and how soon after the previous case they can file.

Chapter 7 and Chapter 13 Overview

Chapter 7 is a personal bankruptcy that requires the debtor to sell nonexempt assets, or items not essential for living, to pay creditors. It removes unsecured debts that don’t have collateral, such as medical debt and credit card debt.

Secured debt, such as mortgages, can get discharged, but the lender can seize the property if the debtor falls behind on payments. The debtor commonly gets the discharge in three to six months after they complete all filing requirements.

Chapter 13 helps the debtor to repay debts over three to five years with a court-approved plan. The debtor doesn’t have to sell their property, but they must make enough income to qualify.

Filing multiple bankruptcies

Some factors affect when a debtor can file a second bankruptcy. These include:

  • The success of the first bankruptcy
  • The type the debtor wishes to file
  • How much time has lapsed after the last case

Chapter 7 bankruptcy requires debtors to wait a minimum of eight years to file another Chapter 7 case. Filing Chapter 7 after 13 is often called Chapter 20 and requires waiting four years after the last filing date. However, if they debtor waits, they can catch up on payments. File Chapter 7 after Chapter 13 requires waiting six years before filing, and if the filer paid debts in full, the waiting period could get waived.

Sometimes, filing a second bankruptcy is necessary, but it affects credit scores. Knowing the time limits can help a debtor decide if they need to file again or seek other alternatives for debt relief.