How Often Can I File for Bankruptcy?

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How Often Can I File for Bankruptcy?

If you filed for bankruptcy in the past and you are in debt, you may be wondering whether you can file again. Whether you can or can’t depends on many factors.

What is Business Bankruptcy vs. Personal Bankruptcy?

Bankruptcy is divided into two main groups: personal bankruptcy versus business (corporate) bankruptcy.

Businesses are often legal entities that are incorporated and include limited liability corporations, S corporations, C corporations, and partnerships. If you are a small business owner, you may be wondering whether it would be better to file for personal bankruptcy or business bankruptcy.

Businesses can file under Chapter 7 or Chapter 11 Bankruptcy. Chapter 7 bankruptcy is for people who cannot and will not be able to repay their debt. Chapter 7 bankruptcy stays on your credit report for up to 10 years and you lose any property in your own name unless it is exempt. Notwithstanding, your debt is discharged. Chapter 11 bankruptcy is for business and corporations and allows them to either reorganize or liquidate their assets in order to repay debt.

Most individuals file either Chapter 7 or Chapter 13 bankruptcy. Chapter 13 bankruptcy is for individuals who still have income and can manage their debts. They form payment plans in order to repay their debts. Under a Chapter 13 bankruptcy, the debtor proposes to make installments to repay debt over a three to five year period. The remaining debt may be discharged.

How Often Can a Business Have Its Debts Wipe Out in Bankruptcy?

In general, there is no limit to the amount of times your business can file for bankruptcy. While bankruptcy laws do not set limit the number of times you file for bankruptcy, you need to be aware of your timing. If you file too soon after you received a discharge of your debts from a previous bankruptcy, you cannot immediately receive another discharge. For example, a business that files under a Chapter 7 bankruptcy cannot receive a second discharge of debts within eight years from the date that the initial bankruptcy proceeding was filed.

How Often Can an Individual Get Their Debts Wiped Out?

Just as a business can file for bankruptcy multiple times, so can an individual, but she must be cognizant of timing. As stated above, someone who files for chapter 7 bankruptcy cannot receive a second discharge of her debts within 8 years. Similarly, if you received your first discharge of debt under a Chapter 13 bankruptcy, you cannot receive a second discharge within two years from the date the first case was filed. Nevertheless, if your first case was dismissed, or your discharge was denied, you are free to file for another Chapter 13 bankruptcy within 2 years.

What Do I Need to Do to Start the Bankruptcy Process?

The process for bankruptcy depends largely on what type of bankruptcy you’re filing. For Chapter 7 bankruptcy, you start by getting mandatory counseling from an agency that has been approved by the U.S. Trustee’s office in the six month period prior to filing for bankruptcy. Then you need to file your petition with the bankruptcy court. After your paperwork is properly filed, the court will appoint a trustee to handle your bankruptcy proceeding, your eligibility for Chapter 7 filing is confirmed, and if you qualify, your debt is discharged.

Individuals filing for bankruptcy, regardless of Chapter, must complete a credit counseling course and then petition the court for bankruptcy. Some types of businesses are exempt from the credit counseling requirement; please consult an attorney for specifics. You must also file monthly operating reports with the court and submit a plan of repayment stating how you propose to treat each creditor. Once the repayment plan is approved by a judge, you must make payments to each creditor consistent with your plan.

How Can a Bankruptcy Lawyer Help?

Filing for bankruptcy is a lengthy and complicated process. There are also several nuances in bankruptcy law. A licensed, skilled bankruptcy attorney can help you prepare your petition to discharge your debt.

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Last Modified: 06-22-2017 11:59 AM PDT

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