Filing Chapter 7 After A Chapter 13 Discharge: 6 Years
After a Chapter 13 discharge, the standard waiting time before you can file Chapter 7 is six years from the previous filing date.
The six-year wait can be waived if you paid your unsecured debts in full in your original Chapter 13 case or if you paid at least 70%, your plan was made in good faith and you made your best effort to repay.
How To Reestablish Your Credit
After declaring bankruptcy, you’ll want to look at ways you can earn a score in a range that will qualify you for better financing options and that begins with rebuilding your credit.
You may not be able to immediately qualify for the best credit cards, but there are others that apply to people with less-than-stellar credit.
Secured credit cards require a deposit that acts as your credit limit. If you make your credit card payments on time and in full on this new secured card, you then have a greater chance at qualifying for an unsecured credit card in the near future.
The Capital One® Secured has no annual fee and minimum security deposits of $49, $99 or $200, based on your creditworthiness. Those who qualify for the low $49 or $99 deposits will receive a $200 credit limit. Cardholders can obtain a higher credit limit if they make their first five monthly payments on time.
The Citi® Secured Mastercard® is another option with no annual fee. There is a $200 security deposit required, which then acts as your credit limit. Cardholders can also take advantage of Citi’s special entertainment access, which provides early access to presales and premium seating for concerts and games.
Once you open a new credit card, make sure you pay your monthly bills on time and in full so you can start working your way toward better credit.
Here’s How Bankruptcies Impact Your Credit Score
While bankruptcies on your credit report will always get factored into your credit score for as long as they are on there, the impact on your score lessens with each year that passes. So, you may see a dramatic drop in your score in the first month immediately following your bankruptcy filing, but by the end of the first year it could have less weight, and certainly less in later years compared to year one.
Your own credit profile will also play a part in how much your credit score is affected when you declare bankruptcy. Similar to how having a higher credit score can ding your more points if you miss a credit card payment, so, too, is the case if you file for bankruptcy. According to FICO, someone with good credit may experience a bigger drop in their score when a bankruptcy appears on their report than someone with an already poor credit score.
Estimates we found online from places like Debt.org show how people with different credit scores would be impacted by a bankruptcy filing. Someone with a credit score of 780 or above would be dinged between 200 and 240 points, while someone with a 680 score would lose 130 to 150 points.
Whatever the case, no one really benefits from filing for bankruptcy. It’s an option of last resort that sometimes even those with good credit find themselves making.
Also Check: Renting After Bankruptcy Discharge
How Long Between Bankruptcy Filings
There’s a good chance that you can file for bankruptcy after having already gone through one. How soon depends on what kind of case you filed earlier and what you’re planning on filing this time.
It also depends on whether the earlier case resulted in discharge. A bankruptcy discharge releases the debtor from personal liability of any debts included within a bankruptcy case. If the previous case was dismissed without a discharge, you could file again right away, subject to restrictions. A bankruptcy dismissal occurs when a judge or trustee closes your case before it is complete.
File Petitions And Other Paperwork
Your attorney will file a substantial amount of paperwork with the bankruptcy court. This includes the petition and forms describing your assets and liabilities, income and expenses, and contractual obligations and leases. Obviously, completing and submitting these documents will take some time. This can take a few weeks or a few months, depending on the size and complexity of your assets and debts.
Also Check: How To Declare Bankruptcy In Canada
Consider The Cons Of Double Filing
If you file too soon, you cannot legally have another debt discharge until the time limits have passed, so the process could waste your time and money.
Furthermore, if a judge finds that you have filed again “in bad faith,” they will stop your automatic stay , unless you can provide clear and convincing evidence that you filed in good faith. They might even throw your case out.
Chapter To Chapter Options
Chapter 7 to another Chapter 7 bankruptcy 8 years Chapter 7 now filing for Chapter 13 bankruptcy 4 years Chapter 13 now filing for Chapter 7 bankruptcy 6 years Chapter 13 to another Chapter 13 bankruptcy 2 years
The wait times help prevent abuse of the system and high credit card debt that cannot be repaid. You are expected to make your best effort to pay off bankruptcy in between filings.
Also Check: Leasing A Car After Chapter 7
Consider A Consumer Proposal
What are your options if you have declared bankruptcy in the past, and you have new debts? To avoid the additional costs and consequences of filing bankruptcy more than once you could consider a as a way to negotiate a settlement with your creditors. You will avoid a repeat bankruptcy but still find a solution to your current financial problems.
If you find yourself facing the possibility of filing bankruptcy a second or third time, and ask them about your alternatives.
If Your Previous Bankruptcy Was A Chapter 7
If you previously filed Chapter 7 bankruptcy successfully, this means you may have had some of your assets liquidated to pay off delinquent debts. You also had debts included in your bankruptcy discharged.
If you are in a position where you are once again struggling to repay delinquent debts, you must wait at least eight years before you can file for Chapter 7 bankruptcy again. Keep in mind, however, that the eight years begins from the original date of filing and not the original date of the first Chapter 7 bankruptcy discharge.
You may, however, file a Chapter 13 bankruptcy and receive a discharge after a successful Chapter 7 case after waiting only four years.
Yesner notes that occasionally you can file a motion for Chapter 13 bankruptcy sooner than four years after a Chapter 7 bankruptcy and that this scenario is a lot more common than people think. Its so common, in fact, that attorneys have come up with a slang term to describe a Chapter 7 bankruptcy followed promptly by a Chapter 13 bankruptcy. This slang term, which is not really a type of bankruptcy at all, is called a Chapter 20. According to Yesner, some courts allow this type of case to proceed and others do not.
Yesner offered the following example to explain how he is helping a client in this exact situation:
Recommended Reading: Bankruptcy Software For Consumers
What Is The Current Monetary Policy Of Sri Lanka
Monetary Policy Review No. 6 2019. The Monetary Council of the Central Bank of Sri Lanka, at its meeting on October 10, 2019, decided to lower the interest rate on the Continuous Deposit Facility and the interest on the balance of the Central Bank. line of credit at the current interest or interest rate.
How Long Does Bankruptcy Last
Bankruptcy lasts approximately 9 months, provided that it is your first bankruptcy and you complete all of the duties assigned to you. Your bankruptcy may last up to 21 months if you have to pay surplus income, which is calculated according to standards established by the Office of the Superintendent of Bankruptcy Canada and coordinated by your trustee after examining your income, expenses, and dependents in your household.
If it is your second bankruptcy, you will be bankrupt for 24 or 36 months. If you have been bankrupt more than once previously, have not complied with your duties, or have committed one or more bankruptcy offences, your bankruptcy timeline will be determined by the court.
After you have received an Absolute Discharge from your bankruptcy, you will no longer be responsible for any of the discharged debts. However, the fact that you filed a bankruptcy will appear on your credit rating for 6 to 7 years, depending on the province you live in.
Read Also: Buying A Car After Chapter 13
Bankruptcy In The United States
Like the economy, bankruptcy filings in the U.S. rise and fall. In fact, they are like dance partners where one goes, the other usually follows.
Bankruptcy peaked with just more than two million filings in 2005. That is the same year the Bankruptcy Abuse Prevention and Consumer Protection Act was passed. That law was meant to stem the tide of consumers and businesses too eager to simply walk away from their debts.
The number of filings dropped 70% in 2006, but then the Great Recession brought the economy to its knees and bankruptcy filings spiked to 1.6 million in 2010. They retreated again as the economy improved, but the COVID-19 pandemic easily could reverse the trend in 2021. It seems inevitable that many individuals and small businesses will declare bankruptcy.
Can You Back Out Of Chapter 13
The Bankruptcy Code allows debtors in Chapter 13 cases to voluntarily dismiss their bankruptcy case at any time. The ability to dismiss a case can be useful in many different situations. For example, when plan payments are higher than anticipated when the case is filed, debtors may wish to have their case dismissed.
Recommended Reading: Cost To File Bankruptcy In Wisconsin
How Long Do You Need To Wait Between Bankruptcies
While theres no law restricting how frequently you can file a bankruptcy, there are a few practical matters that can limit you.
First, if your filings are abusive or for the sole purpose of delaying or frustrating your creditors, a bankruptcy judge can stop you from filing. When this happens, a judge may dismiss your case with a one year bar, for example, restricting you from filing a bankruptcy petition within the next year.
Second, the bankruptcy code restricts how frequently you can obtain a bankruptcy discharge. In other words, the bankruptcy code restricts how often your debts can be forgiven. If you received a discharge in your first bankruptcy, then a set amount of time must pass before you can have your debts discharged by the courts again. So, while you can file for bankruptcy as many times as you need, you wont receive a second discharge until a certain amount of time has passed.
You may be wondering why you would want to file a bankruptcy if you cant have your debts forgiven, but there are many reasons you would do this. You may want to file for the purpose of establishing a payment plan, to repay mortgage arrears, or to catch up on missed car payments, for example.
Whether your eligible for a discharge in your second bankruptcy case depends on whether you received a discharge in the first case, what type of discharge you received, and what type of case youre filing. We discuss these rules below.
The following combinations are how long that wait is.
What Happens When You File For Bankruptcy A Second Time
Legally speaking, a person can file for bankruptcies as many times as they want. However, the process becomes more restrictive.
With a second bankruptcy, you will not qualify for an automatic bankruptcy discharge in nine months. Bankruptcy will last from 24-36 months, depending on whether or not you have surplus income.
A trustee will ask the court to hear your application for discharge. The court will decide the terms of your discharge, including how long you will be in bankruptcy and whether you are required to continue making payments into bankruptcy. A creditor can also oppose your bankruptcy discharge which could result in your bankruptcy lasting longer and possibly costing more.
You May Like: How Much Does It Cost To File Bankruptcy In Iowa
If Your Previous Bankruptcy Was A Chapter 13
If you successfully filed for Chapter 13 bankruptcy in the past, this means you had your debts restructured so you could pay them off over three to five years. This also means that you were able to keep your personal property throughout the bankruptcy process.
If you are in a position where you need to file bankruptcy again after a Chapter 13 bankruptcy, you will find that the waiting limits arent quite as severe.
According to Jay Fleischman, a consumer protection attorney with over 20 years of experience representing people in bankruptcy cases, you can file for Chapter 7 bankruptcy any time after a Chapter 13 bankruptcy provided your previous bankruptcy case resulted in you paying off all debts included in the case. The court may, however, allow another discharge if the old case paid at least 70% of your creditors and the new Chapter 13 plan was proposed in good faith and represents your best effort, said Fleischman.
If your Chapter 13 bankruptcy did not result in you meeting these requirements, then you must wait six years from the date of your Chapter 13 filing to file for Chapter 7 bankruptcy.
If you filed for Chapter 13 in the past, you are also eligible to receive a discharge in a Chapter 13 case as long as the first case was filed more than two years before the new one, noted Fleischman.
An Example Of Serial Filing
Even if your prior cases were more spread out more than just the last 12 months, you might not be home free. Your bankruptcy trustee, the Office of the U.S. Trustee , and your creditors will scrutinize all your prior cases to determine if you are trying to take advantage of the system. For example:
Dave and Margaret filed a Chapter 13 case in 2018. This wasn’t their first case. Their prior cases include:
- 2011, Chapter 7 case: received a discharge
- 2013, Chapter 13 case: case dismissed for failure to make plan payments
- 2016, Chapter 13 case: case dismissed for failure to file required paperwork
In each case, the automatic stay was not affected, but after the latest case was filed, the Chapter 13 trustee asked the court to dismiss the stay for serial filing. Dave and Margaret will likely have to go into court and testify regarding the reasons for filing and dismissing both of the previous Chapter 13 cases. If the court allows the new case to continue, it will probably be under the condition that if the new case is dismissed, the couple will not be permitted to file another case for a period of time, which can often be a year or more.
If their actions particularly perturb the court, the court could immediately dismiss the case with a provision that would prevent them from re-filing for a period of time. In certain egregious cases, courts have permanently enjoined a debtor from ever filing another bankruptcy case.
Read Also: Refinancing Car Loan After Bankruptcy
How Long Does Bankruptcy Stay On Your Credit
How long will a dismissed bankruptcy stay on your credit? Even if no bankruptcy exemption is granted, credit bureaus, like any bankruptcy, must file and declare filed and terminated bankruptcies within 10 years. If your credit report incorrectly lists a case as rejected, you can remove it. Wait 10 years.
Receiving Another Bankruptcy Discharge
You’ll qualify for another discharge if you meet the waiting period rules. Here’s how it works.
Chapter 7 to Chapter 7. If you received aChapter 7 discharge previously, eight years must elapse between the old and new filing dates.
Chapter 13 to Chapter 13. Two years must elapse between the two filing dates to receive a discharge in Chapter 13. Because a Chapter 13 repayment plan usually takes three to five years to complete, you’ll likely be eligible for a second discharge after finishing the first case.
Chapter 7 to Chapter 13. Four years must elapse between the Chapter 7 and Chapter 13 filing dates. Chapter 13 has its benefits even if you don’t receive a discharge, however. For instance, you can pay off priority debts, such as newly-incurred taxes or domestic support arrearages. Or, you can catch up on missed mortgage or vehicle loan payments and keep a house or car. Filing for Chapter 13 immediately after receiving a Chapter 7 discharge is commonly referred to as a Chapter 20 bankruptcy.
Chapter 13 to Chapter 7. If you received a Chapter 13 discharge and you’d like to receive a Chapter 7 discharge, you’ll have to wait six years between filing dates. But there is an exception to this rule. The six-year rule won’t apply if, in the previous Chapter 13, you paid back:
- all of your unsecured debts, or
- at least 70% of your unsecured debts in a plan proposed in good faith and implemented through your best efforts.
Also Check: Cinlegal Com
How Will Filing For Bankruptcy Affect My Credit Score
In fact, as you get older, the elements of a bankruptcy report have less and less impact on your creditworthiness. By the way, this can say how quickly a bankruptcy filing is filed, as opposed to dropping collection accounts and filing them later. The “lifetime credit” factor, which is about 15% of your score balance, is generally independent of filing for bankruptcy.