Can you File for Bankruptcy Twice

Bankruptcy is a solution sought by people in deep financial trouble. The two major options that lie before a debtor is to seek relief under Chapter 7 bankruptcy or Chapter 13 bankruptcy. Under Chapter 7, the assets of the debtor are liquidated and distributed amongst the creditors. Chapter 13, on the other hand, reorganizes the financial position, providing an opportunity to a debtor with a continuous and regular income to make monthly payments to the debtors at the agreed amount during the stipulated time frame. Both these two forms of bankruptcy can be filed twice, provided the debtor satisfies the criteria mentioned for the same. The amendments made to the federal laws have made it tougher to file bankruptcy twice.

As a preliminary condition the past bankruptcy has to be officially discharged by the courts before one can seek multiple bankruptcy. A debtor can file for Chapter 7 bankruptcy only after an interval of eight years after the discharge date of the previous one. But had he initially filed Chapter 13 bankruptcy, then the waiting period before seeking Chapter 7 bankruptcy is six years. There may arise extreme circumstances wherein the debtors will be permitted to seek relief under Chapter13 after having filed for Chapter 7 four years back. If the debtor managed to pay at least 70 percent of the amount outstanding under the previous Chapter 13 bankruptcy program to the creditors, he will be exempted by the bankruptcy court from the eight year wait before filing for Chapter 7.

According to the latest amendments the debtor going for bankruptcy twice is to undergo training under a credit counselor. He is to prove his financial dilemma through a means test and submit the proof of the same to the court along with the petition for bankruptcy.

But it is always wiser to inculcate a healthy financial culture by keeping a tight rein over the expenses in lieu of seeking relief through bankruptcy.