The concept of allowing a debtor to get relief from unmanageable economic distress with a fresh start has a long history in the U.S., dating back to bankruptcy’s incorporation within the Constitution. Although bankruptcy operates under federal jurisdiction, California has its own state-specific rules. A lot of the state rules concern which items are included and the maximum value for property that is exempt from attachment by creditors.
Initially, there are two types of bankruptcy for an individual, Chapter 7 and Chapter 13. The primary difference is a Chapter 7 is considered a full discharge of debt while Chapter 13 is a restructuring of debt with a partial repayment to creditors. Nothing in the bankruptcy code specifies how many times an individual can declare bankruptcy, but legal experts explain the code does restrict how long one must wait to file after a previous filing was discharged. Precisely how long depends on the type of bankruptcy previously filed and the type presently contemplated.
One caveat, however, is that the following timelines do not apply if the bankruptcy was dismissed and not discharged. If so, longer timelines will likely be imposed by the bankruptcy court. Otherwise, for example, if an individual has filed and been discharged from a Chapter 13 bankruptcy, another 13 can be filed immediately. Going from one Chapter 7 to another Chapter 7 would require a discharge from the first filing and eight years to elapse from the first to the subsequent filing.
If a debtor wants to transition from one type of bankruptcy to another, there are more specific requirements. A bankruptcy lawyer can help a client by answering any questions or concerns regarding specific circumstances.