Chapter 13 bankruptcy is also called the wage earner’s plan. If an individual or couple find themselves in financial hardship after previously filing Chapter 13, there are certain circumstances where they can file Chapter 13 again. Under the bankruptcy court, the regular earner pays for all or part of his debts over a three- to five-year plan. The debtor must file for Chapter 13 bankruptcy with the bankruptcy court within the service area in which he resides.
Bad luck happens to everyone, but most people who have declared bankruptcy more than once have done so due to poor money management skills. Living beyond your means can get you into serious financial trouble. Declaring bankruptcy multiple times can have a lasting effect on your life: a Chapter 13 bankruptcy stays on your credit report for up to seven years, payments can be taken from your payroll check for up to five years, and the embarrassment of having your financial records on file with the court system can cause psychological fear and guilt to plague your life.
If the debtor previously filed for bankruptcy, to be eligible to file again under Chapter 13, the proceeding must have occurred more than two years ago. If a debtor received a discharge under Chapter 7, 11 or 12, those proceedings must have occurred more than four years ago.
A petitioner may be eligible to file for bankruptcy under Chapter 13 before the two-year period if all unsecured claims in the previous bankruptcy case were paid in full or under the previous plan 70 percent of the payments on allowed unsecured claims were paid. A bankruptcy attorney can advise if you are eligible to file again.
With a second bankruptcy, the ability to receive an automatic discharge is more difficult. An automatic discharge will take approximately 24 months if the petitioner has no surplus income. Surplus income is the amount of money earned over the government-defined threshold in one month. If the petitioner has surplus income, then the automatic discharge process can take up to 36 months.
Anytime you file for a bankruptcy, the court will require you to attend a court-approved credit counseling course. Credit counseling can be a good way to learn life skills like budgeting and money management. If you have been through a previous bankruptcy, these courses could be beneficial to as a way to learn how to avoid future financial troubles. The court will require a certificate of proof stating that you attended and completed the recommended courses.