Can I Refile for Bankruptcy If I Did Not Finish My First Bankruptcy?
Bankruptcy can be a long and complex process. Chapter 7 cases typically take about four to six months to complete, while Chapter 13 can take anywhere from three to five years. When a case is open for such a long time, anything could happen to interrupt the process. If you don’t complete the filing process the first time around, can you still file a second time? Our Chester County bankruptcy attorneys explore the options.
Reasons for Bankruptcy Dismissals
There is no such thing as a partial bankruptcy: you either receive a discharge, or you don’t. Dismissal or denial can terminate a bankruptcy case before a discharge is obtained. There are many different reasons a case may be denied or dismissed against a debtor’s wishes:
- You missed a deadline
- You included inaccurate or fraudulent information on your paperwork when you were filing
- You didn’t complete the credit counseling requirement
- You hid your assets in an attempt to protect them from repossession
- You didn’t go to the meeting of creditors, also known as the 341 meeting
- You failed to make the payments you outlined in your Chapter 13 repayment plan
- You didn’t file all the forms you were supposed to
- You didn’t pay the appropriate filing fees
- You destroyed or concealed your financial records
- You went against a court order
- You didn’t show up for a court date
Unfortunately, a denial or dismissal is generally bad news for the debtor. Instead of enjoying the benefits and protections of bankruptcy, like debt relief and the automatic stay, the debtor is essentially “back to square one” with his or her creditors and financial obligations.
Thankfully, even if your first case wasn’t discharged, you can generally still file again if necessary.
Restrictions on Refiling Bankruptcy
The lack of a discharge in the original case is actually an advantage in terms of time. While there is no time restriction for filing successive bankruptcies after obtaining a discharge, you are not necessarily eligible to receive another discharge. To obtain another discharge through Chapter 7, a debtor must allow eight years between petition dates. In Chapter 13, the period between discharges must be two years. When you are filing between chapters, the time frame is different. If you received a discharge in a Chapter 13 bankruptcy, you are required to wait at least six years to obtain another discharge through Chapter 7. However, this period could be shorter if you paid 100% of your unsecured creditors in your Chapter 13. Additionally, if your first discharge was in a Chapter 7 bankruptcy, four years must elapse before a Chapter 13 discharge could be entered.
In bankruptcy cases where you never received a discharge, there are some time restrictions from filing another case. Typically, if the bankruptcy that was dismissed is your first filing, you could file the same day of receiving a dismissal. However, if a debtor filed multiple bankruptcies, then there are significant restrictions that apply.
- If your last case was dismissed due to failure to appear or non-compliance with a court order, you must wait 180 days to file a second time.
- If your last case was denied, it is unlikely that you will be able to obtain a discharge for the debts associated with that case.
The Effects of a Chapter 13 Dismissal and the Automatic Stay
You also need to understand that refiling after a dismissal may also affect the automatic stay, which is very important because of its role in protecting debtors from collection actions during a bankruptcy. If your previous case was dismissed within the previous year, and you file for the second time, the automatic stay will only last for 30 days.
If you want this protection period to last longer than 30 days, your New Jersey bankruptcy lawyer can help you file a motion to extend the stay. Since the stay will only last for one month without a modification, this motion should be filed as soon as possible, ideally within several days. For the order extending the automatic stay to be granted, a debtor must show to the satisfaction of the court that there was a significant financial change in circumstances that will allow the new case to be successful. For example, if the reason you were unable to make payments in the previous case was because of a job loss, then a new job, even if the income was the same, would constitute a change in financial circumstances. The following are some other common examples.
- An increase in salary, hours, or overtime
- An additional job
- A decrease in expenses
- Additional contributions from family members or friends
- A decrease in the total debt
If you had two bankruptcy dismissals during the previous year, there is no longer any automatic stay at all, meaning you have zero protection against your creditors. Needless to say, this is not a good position to be in. Fortunately, it may be possible to be granted a stay if, within 30 days of filing your new case, you can persuade the judge that the new case was not filed in bad faith. Our experienced attorney will have to file a motion to impose an automatic stay. The burden on the debtor in this situation is much higher than the burden in extending the stay past 30 days.
Bad faith essentially means that you filed with unethical ulterior motives. Bankruptcy is intended to help people overcome insolvency, so if a debtor files for some other, unapproved purpose, such as getting out of a debt or contract, then he or she may be deemed to be acting in bad faith. Unfortunately for people who file frequently, opening multiple cases is often assumed to be a sign of bad faith.
By comparison, good faith means a debtor acts with honesty and sincerity, and doesn’t abuse the bankruptcy system for personal gain. To maximize your chances of being interpreted as acting in good faith:
- Your repayment plan should be accurate, comprehensive, and financially feasible.
- You should be completely, consistently compliant with all court orders.
- You should not miss any deadlines or court appearances.
- You should not engage in any fraud or deceptive practices.
Benefits of a Chapter 13 Dismissal in Pennsylvania
After struggling for several years in a Chapter 13 bankruptcy, a debtor could feel overwhelmed if their case is dismissed. Now clearly, it is in the best interests of any debtor to successfully complete their bankruptcy and obtain their discharge. However, if it was the debtor’s first case, there could be some unforeseen benefits attached to the dismissal.
For example, a husband and wife filed for Chapter 13 because of foreclosure and scheduled sheriff sale of their home. Under other circumstances, they would have qualified for a Chapter 7, so as an additional benefit their unsecured debt will be discharged. However, they are far behind in the mortgage and the monthly trustee payment is difficult to pay each month. For two and a half years they make their mortgage payments and their trustee payments. Unfortunately, at that point, they fall behind in their trustee payments and their case is dismissed.
While this is not the best possible situation, there might be a silver lining. Because it was their first bankruptcy, they can file again immediately. If they do so, two factors could result in a lower trustee payment. First, they have been paying the trustee payment for two and a half years, so the balance owed on the mortgage arrearage has decreased. Then, because it is a new case, the debtors are granted a full additional 60 months. With a lower balance to pay, and additional time to pay it off, the monthly trustee payment could be significantly lower, making the second bankruptcy case less challenging. You should discuss the particular facts of your situation with our bankruptcy attorney. While a lower payment is possible, several circumstances could also affect your new payment.
Voluntarily Dismissing a Chapter 13 Bankruptcy After a Motion for Relief Order
One of the most common reasons people file for Chapter 13 is because they are in foreclosure and in jeopardy of losing their home in a sheriff’s sale. Bankruptcy allows a homeowner to pay the money they are behind on through their bankruptcy plan. At the same time, a debtor will be required to make their usual monthly mortgage payments directly to their lender. Often, a debtor’s finances are strained, and making both payments becomes difficult.
If a debtor falls behind in their mortgage payments during their bankruptcy, the mortgage company will file a motion for relief from the automatic stay. The purpose of this motion is to petition the court to remove the home from the protection of the bankruptcy. If a relief order is granted, then the lender could move forward with its available legal remedies, including continuing the foreclosure lawsuit. When this occurs, a debtor is no longer achieving their purpose for filing bankruptcy. Once again, their home is in danger of being sold at a sheriff’s sale.
Every Chapter 13 debtor has a right to dismiss their bankruptcy voluntarily. If a debtor has a motion for relief order entered in their case, they might believe that they could voluntarily dismiss their case and begin again. Unfortunately, in this instance, that is prohibited – no matter if the current bankruptcy was the debtor’s first and only one. If a case is voluntarily dismissed after a relief order has been entered, the debtor is barred from filing another case for 180 days.
If the court enters a relief order, it is vital to discuss the matter with our experienced bankruptcy attorney. While voluntarily dismissing your case may not be helpful, there are options available. If the trustee dismisses the case for payments, then you can immediately refile. We could also file a motion to reinstate the automatic stay if you are able to pay the amount you owe.
Pennsylvania Bankruptcy Lawyers Offering Free Consultations
Successfully completing a Chapter 13 bankruptcy is difficult, and many debtors struggle at some point during their case. Having a case dismissed or a confirmation denied does not mean you are no longer able to benefit from filing for bankruptcy. Likewise, many people continue to struggle after obtaining a discharge and wonder if they can file again. If you are thinking about filing or refiling in Pennsylvania or New Jersey, an experienced bankruptcy attorney can help walk you through the process. To set up a completely free and confidential case evaluation, call Young, Marr & Associates today at (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania. You can also contact our law offices online.