People in New Jersey, and across the United States, file for personal bankruptcy for many reasons. For those who have had a previous bankruptcy and run into financial trouble again, a common question is whether they can get a discharge through Chapter 7 with a subsequent filing. Given the current health-related situation negatively impacting people financially, causing job loss and financial hardship, it is important to know the options and how getting on stronger financial ground can be achieved even if a person has a past bankruptcy. A second discharge is possible, but there are time constraints. Knowing them is key and it can be helpful to have legal assistance from the beginning.
Seeking a second discharge and the bankruptcy rules governing it
There are requirements for people who file for bankruptcy regardless of the circumstances, but there are specific rules for a second discharge after a prior bankruptcy. If a person has had a discharge through Chapter 7 or Chapter 11 in the previous eight years before the second filing, the court will deny a discharge under Chapter 7. A Chapter 7 discharge will also be denied if there was a discharge under Chapter 12 or Chapter 13.
Chapter 12 is a bankruptcy for family fishermen and family farmers and Chapter 13 is one in which there is a payment plan with the debtor allowed to retain certain properties. The debtor can get a Chapter 7 discharge after a Chapter 12 or Chapter 13 if the unsecured debts from the prior case were fully paid or the debtor paid 70% under the plan with the payments made in good faith and through best effort.
The importance of legal advice when considering a second bankruptcy
People who have filed for bankruptcy are not prevented from filing again, but it is important to understand the requirements for the plan to be successful. Often, they will opt for Chapter 7 bankruptcy as it will clear unsecured debt like credit cards and they can move forward with a fresh start to their financial lives. Before functioning under the assumption that there are no alternatives because of a previous discharge, it is wise to know the facts. Consulting with an experienced bankruptcy legal professional who understands the rules may help with moving forward with a case even if there was a previous discharge.