For New Yorkers who are facing financial trouble, bankruptcy is a legal and time-tested option to get into a better situation, clear debts and move forward. However, it is not uncommon for people to again struggle financially due to unexpected issues like job loss, medical expenses and other challenges. This is especially prevalent given the current situation across the United States. Regardless of the reason, people who are wondering if they can file for Chapter 7 bankruptcy after a previous bankruptcy discharge should understand the facts about it.
Rules about seeking a second discharge in a later Chapter 7 filing
When seeking a Chapter 7 discharge after getting a previous discharge, there are rules about how soon it can be filed depending on which chapter the previous filing was under. If it was a Chapter 7 or Chapter 11 filing, then there cannot be another discharge until eight years have passed between cases. If a person filed under Chapter 12 or Chapter 13 in the previous six years, then there cannot be a discharge under Chapter 7 with a new filing.
However, if the debtor paid all allowed unsecured claims in the Chapter 12 or Chapter 13 or the payments that were made came to a minimum of 70% of the allowed unsecured claims in a good faith plan and based on the person’s best effort, then there can be a new Chapter 7 filing and discharge. Debtors cannot get a discharge under Chapter 13 if they received a discharge under Chapter 7, 11 or 12 in the four years prior to the new case or in a Chapter 13 filed within two years.
Those seeking a second discharge should understand the process
People who have already filed for bankruptcy in the past will have a basic knowledge of the process from the start. That does not mean the rules are the same if they need to seek a second discharge under a new Chapter 7 bankruptcy filing. Chapter 7 is an effective strategy to clear significant debt and get off to a new start. This is true even for those who filed for bankruptcy in the past. Before moving forward, it is essential to know the specific rules with a second discharge as this can be imperative to achieve the desired outcome.