This article is for informational purposes only. Ascend does not provide legal advice, and are not attorneys. If you'd like to speak with a bankruptcy attorney that serves your city, you can speak with one in a
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You are allowed to file for Chapter 7 bankruptcy before eight years have passed, but you will not be able to have your debts discharged until the eight-year period is over. Many people do not realize this important difference.
There are a few exceptions to this rule. If you cannot file for bankruptcy again so soon, there are also other ways to deal with debt problems.
Let’s take a closer look at filing for bankruptcy more than once, so you know what your options are if you need to file another Chapter 7 case.
What Is a Bankruptcy Discharge and How Do I Get One?
A bankruptcy discharge is a court order that removes your legal obligation to pay a debt. For example, if you owe ABC Credit Card Company $15,000, you would list them in your Chapter 7 paperwork and finish your case.
If ABC Credit Card Company does not object, the court will discharge the debt, meaning it is erased. This means ABC cannot try to collect the debt from you in any way. This includes actions such as:
- Turning the debt over to a debt collector
- Sending you letters or calling you about the debt
- Filing a debt collection lawsuit
- Seizing assets or garnishing your wages
- Reporting the debt on your credit report as delinquent debt
Once your debt is discharged, you no longer owe ABC Credit Card Company any money.
Most unsecured debts can be wiped out through Chapter 7 bankruptcy. These debts include:
- Credit card debts
- Medical bills
- Personal loans
- Personal judgments (except DUI judgments)
- Most payday loans
- Some old income tax debts
- Old rent and lease payments
- Deficiency judgments for repossessions and foreclosures
The main reason to file for Chapter 7 is to have your debts discharged. This helps you recover from financial trouble and move on with your life.
To get a bankruptcy discharge, you need to file your case and finish all the required steps. If you do not complete the process, such as missing your Debtor Education Course or not attending your hearing, the court will dismiss your case and you will not get a discharge.
A creditor or trustee can also object to your bankruptcy discharge. If this happens, the court might deny the discharge for a certain debt or even for your whole case.
Waiting Period to File Chapter 7 Bankruptcy Again
You do not have to wait to file another Chapter 7 case. You can file again at any time, but you might not be able to get a bankruptcy discharge right away.
The waiting period between bankruptcy cases is so you can qualify for another discharge. You need to wait eight years between Chapter 7 filings to get a new discharge. If you file before eight years have passed, you will not get a discharge.
If you do not receive a bankruptcy discharge, you still owe your creditors the full amount, just as if you never filed for bankruptcy.
Why Would Someone Need to File Chapter 7 Before 8 Years?
It might be hard to see why someone would need to file for bankruptcy more than once. Here is a simple example that could happen to anyone.
Imagine you built up a lot of credit card and other debts during college or after moving out on your own in your early 20s. With a low income, you used credit cards to cover your expenses. For some, this happens because of inexperience or not knowing how to
manage money yet.
No matter the reason, you could not pay your debts. So, you filed for Chapter 7, got your discharge, and moved forward with your life.
Six years later, you are in a serious car accident and cannot work for months while you recover. You use credit cards and loans to pay your bills, but after returning to work, you cannot keep up with the payments. You need to file for bankruptcy again, but you still have two years before you are eligible for Chapter 7.
There are many situations like these that can lead to filing for bankruptcy more than once. Life is unpredictable, and we cannot always know what will happen in the future.
Many people file for bankruptcy more than once in their lives. This does not mean they are bad with money or misuse credit cards. Often, it just means they faced several tough situations that were out of their control.
That is why the Bankruptcy Code allows people to file for bankruptcy again. It recognizes that people can face difficult events more than once that make it impossible to pay their debts.
You Might Be Eligible to File a Chapter 7 Bankruptcy
What Happens if I Need to File Chapter 7 Before 8 Years?
Sometimes, you might need to file for Chapter 7 before eight years have passed. If that happens, you may have a few options.
You Did Not Receive a Bankruptcy Discharge
You must wait eight years to be eligible for another Chapter 7 discharge. However, if your last Chapter 7 case was dismissed without a discharge, you might be able to file again before eight years, as long as none of the following happened in the past 180 days:
- You failed to appear for a required court hearing, and the court dismissed your Chapter 7 case
- The court dismissed your Chapter 7 case because you disobeyed a court order
- You voluntarily dismissed your Chapter 7 case
If you have already received a Chapter 7 discharge, you might be able to file for Chapter 13 if you are not yet eligible to file for Chapter 7 again.
File a Chapter 13 Bankruptcy Case
You must wait four years between a Chapter 7 case and a Chapter 13 case to get a discharge. So, if it has been at least four years since your Chapter 7 filing, you may be able to file for Chapter 13.
Chapter 13 is a type of bankruptcy where you make monthly payments to a trustee for three to five years. Some benefits of Chapter 13 compared to Chapter 7 are:
- You can save your home from foreclosure in Chapter 13.
- You might be able to lower your car payments to keep your vehicle.
- In a Chapter 13, you can repay non-dischargeable debts, such as taxes and domestic support arrearages, over 3-5 years.
- Chapter 13 cases can protect assets that a Chapter 7 trustee might sell.
Filing for Chapter 13 is usually more complex than Chapter 7. It is a good idea to talk to a bankruptcy lawyer before you file for Chapter 13.
You Might Be Eligible to File a Chapter 13 Bankruptcy
File a “Chapter 20” Bankruptcy Case
Some people use what is called “Chapter 20.” This is not a real chapter in the Bankruptcy Code. It means filing for Chapter 13 right after getting debts discharged in a Chapter 7 case.
First, you file for Chapter 7 to wipe out your unsecured debts. This reduces the amount you would have to pay in a Chapter 13 case. After that, you file for Chapter 13.
You will not get a discharge in the Chapter 13 case if you did not wait four years after your Chapter 7 filing. Still, Chapter 13 can give you time to pay off debts that were not discharged in Chapter 7, like taxes or overdue child support and alimony.
Chapter 13 can also help you catch up on mortgage payments and save your home. For example, you might be able to remove a second mortgage by paying much less than you owe. You could also lower your car payments to keep your vehicle.
Important: Do not try filing for “Chapter 20” without talking to a bankruptcy lawyer. There are risks that could make your finances worse, so always get legal advice before considering this option.
Non-Bankruptcy Alternatives to Get Rid of Debts if You Need to File Chapter 7 Before 8 Years
There are also non-bankruptcy ways to get out of debt. At Ascend, we can help you look at
debt relief options for free.
For example, debt settlement could help you get out of debt without filing for bankruptcy. Debt management is another way to avoid bankruptcy and pay off debts you cannot afford.
You can call or text us at (833) 272-3631 or reach out
online for a free case review. Our friendly and knowledgeable team will help you explore your debt relief options. We want to help you move forward after financial hardship.
