Monthly Archives: January 2017

The Domino Effect: Filing a First and Second Bankruptcy

domino-effect

By:  Ginger B. Kelly, Esq.

If anyone has played dominoes, they realize that one small mistake can cause an entire stack of dominoes to come crashing down.  The same is true for filing first and subsequent bankruptcies.  If a person has received a discharge or has filed for bankruptcy in the past, it’s important to know how soon they can file for bankruptcy again.  Time limitations for discharge under bankruptcy, after filing a prior bankruptcy in a Chapter 7 or Chapter 13 bankruptcy, may be tricky and are different under different circumstances and chapters.  This overview is intended to help potential filers make wise choices before the stack of dominoes collapses.

Technically, Time Limits Do Not Apply to Filings

In theory, there is no minimum time to wait before you can file for bankruptcy the second time around.  However, the dilemma with filing a second time is if a person files too soon after they received a discharge of their debts in a prior case, they can’t get another discharge. Filing too soon makes the second bankruptcy filing a waste of time and money.  This is why time frames apply to receiving a second discharge, not the filing of the case.

Filing Again Under the Same Chapter

If a person is filing under the same bankruptcy chapter, the time frames are different depending on whether they file successive Chapter 7 or Chapter 13 cases.

Filing Again Under Chapter 7

If the first discharge was under Chapter 7, a second discharge is not permitted under Chapter 7 again, until eight years from the date the first case was filed.

Filing Again Under Chapter 13

If the first discharge was under Chapter 13, a second discharge is not permitted under Chapter 13 again, until two years from the date the first case was filed.

The only issue with consecutive Chapter 13 bankruptcy cases filed too closely together is if the court refuses to confirm your Chapter 13 plan in the second case. Ordinarily, if the second plan is not confirmed a person can convert the bankruptcy to a Chapter 7.  However, in this set of circumstances, the rules for receiving a discharge under Chapter 7, after a discharge under Chapter 13 will prevent a person from getting a discharge in the converted case.  This is why converting a case from a Chapter 13 to a Chapter 7 too soon, isn’t a good idea in most situations.

Different Chapter Filings: Order Matters

If the second bankruptcy filing is under a different chapter then the first, order determines the time frame.

First, Chapter 13: Second, Chapter 7

If a person received their first discharge under Chapter 13, they cannot receive a discharge under any Chapter 7 case that is filed within six years from the date they filed the first Chapter 13.  Generally, the six-year waiting period exceptions are:

  •  if all the unsecured creditors were paid in full under the Chapter 13, or
  •  at least seventy percent of Chapter 13 claims were paid, the plan was proposed in good faith and the payments were the best effort possible.

First, Chapter 7:  Second, Chapter 13

If a person received a discharge under Chapter 7 first, they cannot receive a discharge under Chapter 13 filed within four years from the date the initial Chapter 7 was filed.

It’s a bit tricky if a person files the second case under Chapter 13, between four and eight years after they filed the first Chapter 7 when the court doesn’t approve the Chapter 13 plan.  If the Chapter 13 plan was not approved, “technically” a person could convert the case to a Chapter 7, but this isn’t a good idea because the rules for successive Chapter 7 discharges would kick in.  In this situation, if the time frame between subsequent filings is not eight years, a person will not receive a discharge in the converted case. If this happens, it is probably best to ask for a dismissal of the subsequent Chapter 13 case.

When a Second Filing May be Helpful, Even Without a Discharge

In certain situations, filing a Chapter 13 case immediately after getting a Chapter 7 discharge might be beneficial.  This is often referred to as a Chapter 20 bankruptcy.

In this situation, for example, a person wants the protection of the bankruptcy court while paying something like a tax debt or non-dischargeable priority debts, under a Chapter 13 plan. Whether or not they will benefit from this type of Chapter 20 bankruptcy depends on the circumstances and the case law in their jurisdiction.  But despite its benefits, a Chapter 20 has many drawbacks and can be subject to bad faith filing objections.  An experienced bankruptcy lawyer in your area would need to be consulted for advice on this topic.

First Case Not Discharged

If the first bankruptcy case did not result in a discharge, typically, a person can file for bankruptcy again with no limitations on the second discharge.

Discharge vs. Dismissal

First, it may be important to note that there is a big difference between a discharge and a dismissal.  A discharge is an order from the bankruptcy court releasing a person from their debts.  A dismissal from a bankruptcy court is an order removing the case from the docket, typically without a discharge.  

If a person successfully completes a case and obtains a discharge, they are no longer on the hook for debts discharged in the bankruptcy. However, if a case gets dismissed, the person who filed will lose the protection of the automatic stay and their creditors are free to come after them to collect their debts.

First Case Dismissal

If a bankruptcy case was dismissed, a person can file again unless the court orders otherwise.  If the case was dismissed for failure to obey a court order, failure to appear in the case, or voluntarily dismissed after a creditor filed a motion for relief from the bankruptcy stay, a 180-day waiting rule applies.  However, quite often there are different rules regarding the bankruptcy stay.  A stay is an automatic injunction that stops actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy.

First Case Discharge Denied

If the discharge was denied in the first case, a person typically may file again but will probably not be entitled to a discharge of the debts from the first case. This is another special circumstance where it is always smart to seek an experienced bankruptcy lawyer for advice.

The take-away from all of this is, as a general rule, if a person files for bankruptcy too soon after they received a previous bankruptcy discharge, they cannot receive another discharge.  Like a neat little stack of dominoes, the second case is very dependent upon the first.  The good news is, avoiding mistakes can be easy.  Consulting an experienced attorney is the first step.

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The Law Office of Ginger B. Kelly is now accepting new clients.  Call and schedule your first appointment.  We are a small law office offering your first confidential consultation, absolutely free of charge.

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.com, or call us at (508) 784-1444.

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NOTICE:  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We cannot stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2015, 2016, 2017, by Ginger B. Kelly, Esq., all rights reserved.

 

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More about Attorney Kelly

Since 2005, Attorney Kelly has been practicing law.  With a strong background in corporate law, consumer finance, criminal defense, conservation and agriculture, Attorney Kelly is passionate about the things that really matter to you. Attorney Kelly knows that sometimes life gets complicated. Finding a good attorney shouldn’t be.

Relationship-building and maintaining affordability is only part of what we do. We also believe in honesty and transparency. This is why each issue and question, brought to our attention, is carefully considered and evaluated. If we are unable to accept your case, we will let you know and give you the best referral possible, free.

We also offer many of thUS District Court District of Rhode Islande best attorney referrals in Massachusetts and Rhode Island.

“Sometimes life gets complicated, finding a good attorney shouldn’t be.”

— Attorney Kelly

AREAS OF PRACTICE

BANKRUPTCY – What we do: Chapter 7, Chapter 13 Bankruptcy and Chapter 11 referrals for corporations, partnerships, LLC companies and individuals who do not qualify under Chapter 7 and 13.  On a limited scope basis, we may assist certain pro-se filers on a case-by-case basis.  What we don’t do:  We are not a “bankruptcy mill.”  We do not shuck-out bankruptcy documents without careful, individual attention to you and your situation.  We will never compromise quality, based on the size, complexity or simplicity of your case.

CIVL – What we do: Credit card and consumer defense, debtor’s rights, foreclosure, repossession, lien, garnishment, student loan defense, debt settlement and credit restoration.  We also handle accident and injury claims, civil infractions, contract, harassment, neighbor disputes, tort and landlord/tenant matters on a case-by-case basis.  We draft wills, medical directives (health care proxies) and financial power of attorney documents.  We accept issues regarding claims settlements, alternative dispute resolution (ADR) and Mediation, on a case-by-case basis.  We also draft contracts, including domain name purchase and sale transactions and transfers and review all types of contracts, including residential and commercial construction contracts.   What we don’t do:  Professional and Medical malpractice cases, complex multiparty litigation, tax and estate planning, intellectual property, patent, copyright and family law.  We also do not take class action or employment and labor dispute cases.

Corporate & Business – What we do:  Corporate formation and records management including non-profits and 401(c)(3) qualification.  We also advise on business compliance issues and financial transactions for corporations, contractors and small businesses. What we don’t do:  Publicly traded corporations, mergers and acquisitions, complex restructuring, capital markets, private equity and corporate governance.

Criminal Defense,  Arraignments, criminal records sealing, unlawful possession of a firearm or controlled substance, OUI/ Melanie’s Law, ignition interlock compliance and hardship license, search and seizure,  traffic, speeding and misdemeanor offenses, simple assault, diversion programs and sentencing alternatives, theft crimes, shoplifting, larceny and more.  Each criminal and traffic matter is evaluated on a case-by-case basis. What we don’t do: Appeals, major felony offenses and capital crimes.  Felony offenses involving firearms, robbery, deadly force, domestic violence and sex crimes.

Agriculture & Food, Right-to-farm and farming rights, insurance, zoning compliance, land tenure and tenancy, agriculture finance, organic certification and records management.  We also advocate on behalf of farmers, farmer’s markets, agricultural inspectors, homesteaders, small farmers, seed banks, coops and gardeners.  What we don’t do:  Labor disputes, worker’s compensation and immigration law.    

Conservation & Environmental Advocacy, Alternative energy and environmental due diligence, advocating and lobbying for conservation and clean energy issues, permitting, compliance and structured finance, septic, water and environmental compliance, wetlands, species-at-risk, air-noise-odor issues, contamination and environmental site research and advocacy.What we don’t do:  Brownfields, Eminent Domain, solid waste and EPA Superfund litigation.        

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ABOUT ME:  Attorney Kelly is an attorney in good standing, licensed to practice in both the Federal District and State Courts of Massachusetts and Rhode Island. Her law practice is focused on consumer debt, finance, bankruptcy and District Court matters. Attorney Kelly is experienced in both criminal and civil trial work. On a personal note, Attorney Kelly enjoys writing and other things, like conservation and agriculture.

To find out more, visit, www.attorneykelly.squarespace.com or www.attorneykelly.wordpress.com, or call us at (508) 784-1444.

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NOTICE:  This is an Advertisement.  This post is not legal advice.  Consult your attorney.  Attorney Kelly does NOT provide legal advice to anyone via social media or anywhere over the Internet.  Any and all electronic posts and writings, by Attorney Kelly, does NOT establish any type of attorney-client relationship, whatsoever, neither perceived, actual, material, implied or other.  We can not stress enough, if you need personal legal advice, always see your attorney.  Do not rely upon Attorney Kelly’s posts, writings or any Internet information on websites or social media for your own personal legal advice.  Seek legal advice and representation from your own personal attorney.

Copyright © 2015, 2016, 2017 by Ginger B. Kelly, Esq., all rights reserved.

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Filed under About Attorney Kelly, Choosing a lawyer, Hiring Counsel, Massachusetts, Rhode Island, Uncategorized