Folks frequently ask if they are eligible to file a Chapter 7 or Chapter 13 case. This article will acquaint you with the 2, 4, 6, 8 Rule and give eligibility guidance.
So, the question is-I filed a Chapter 7 or Chapter 13 in the past: can I file a case now?
This article is limited to whether one is time barred from a new Chapter 7 or Chapter 13. Other factors are not considered such as debt limits, whether you have regular income, or have other obstacles to filing a case.
When analyzing whether one is time barred remember 2 things. First, it is the date of filing of the prior case and not the date of discharge. Second, the prior case must have ended in a Discharge to force any sort of waiting period on you. If there was no previous discharge of the debts i.e. a dismissal, then you are eligible to try again.
THE 2, 4, 6, 8 RULE
When Congress changed bankruptcy laws in 2005, they took a nice clean rule and split it into the system we have today that requires looking at different statutes. When comparing the date of filing of a previous bankruptcy to when you can file another case, the waiting period is as follows:
2 years from a previous Chapter 13 to a new Chapter 13
4 years from a previous Chapter 7 to a new Chapter 13
6 years from a previous Chapter 13 to a new Chapter 7
8 years from a previous Chapter 7 to a new Chapter 7
These requirements are discussed in more detail below. Kind of like a flowchart, just determine whether you fall into Category A, B or C and then look at the reasoning.
CAT. A - NEVER FILED ANY TYPE OF BANKRUPTCY BEFORE
This is the most straightforward one. You are eligible to file a Chapter 7 or a Chapter 13 and get a discharge of your debts. As mentioned above, some other restrictions apply based on income and types of debt that are not discussed here. But unless you received a prior discharge, you are eligible to file either a Chapter 7 or Chapter 13.
CAT. B - YOU FILED A PRIOR CHAPTER 7 CASE
Has it been more than 8 years from the filing date of your Chapter 7 to today's date? If "Yes" you are not time barred from filing a Chapter 7 again. If "No" you are currently time barred from filing a Chapter 7 until 8 years have gone by.
Has it been more than 4 years from today's date? If "Yes" you can file a Chapter 13 and upon completion receive a Discharge. If "No" you are currently time barred from filing a Chapter 13 and receiving a Discharge.
However, even if less than 4 years you can file a Chapter 13 but you will not receive a Discharge. Sometimes people file a Chapter 13 anyway. Especially if the only or primary debt may is mortgage arrears; or a car is about to be repossessed; or IRS levies or garnishments are too much to bear, you can use Chapter 13.
CAT. C - PRIOR CHAPTER 13
Has it been more than 6 years from filing of your previous Chapter 13 case to today's date? If "Yes" you can file a Chapter 7. If "No" you are currently time barred from a Chapter 7 until 6 years have gone by.
Has it been more than 2 years from today's date? If "Yes" you can file a Chapter 13 and receive a Discharge upon completion. If "No" you are currently time barred from filing a Chapter 13 and receiving a Discharge. (This is a very rare situation.)
EXCEPTIONS TO THE ABOVE
The prior Chapter 13 paid all creditors at least 70% of the allowed claims and the plan was proposed in good faith and was one's best efforts. If you fall within this exception you do not have to wait 6 years to file a Chapter 7. The other rule relates to cases converted from Chapter 13 to Chapter 7. Since Chapter 7 is the type of discharge awarded, the Chapter 7 rules of Category B (above) apply, but the date of filing is when the Chapter 13 case was begun.
PERSONAL OPINION OF ROBERT J. ADAMS
When Congress increased the time period between Chapter 7 from 6 years to 8 years it was not in the best interests of the country or its citizens. The lawmakers were catering to the banking and credit card industry that spent years and millions of dollars on getting the laws changed. Likewise it is the same for the increased time period required for filing a Chapter 13 after a Chapter 7 case.
WHAT TO DO NEXT
If you are overwhelmed with debt or you are looking to see if a Chapter 7 or a Chapter 13 can help you, please call us. We are here to help. Our advice is free and confidential, and we would be glad to look up your previous case to help you decide when you are eligible to file another case.
Robert J Adams & Associates has helped thousands of good people, just like you, save their home. Take advantage of our free and confidential consultation today.