High living expenses in California coupled with a crisis like a job loss or serious health problems sometimes send people into bankruptcy. Although bankruptcy is meant to give people a fresh financial start, the law generally recognizes that people might need to file for protection more than once. Debtors must observe waiting periods before filing again, and the type of their original bankruptcy action influences how long they must wait.
Chapter 7 represents a common form of consumer bankruptcy. When successful, it discharges some unsecured obligations, like medical bills and credit card debts. Eight years must pass before the filer can seek a second Chapter 7 bankruptcy. People encounter a shorter waiting period of only four years if they want to file a Chapter 13 case after a Chapter 7 action. In Chapter 13, the court restructures debts and places people on a manageable payment plan instead discharging debts outright.
When people want to file a Chapter 7 case following a Chapter 13 bankruptcy, then the law requires a waiting period of six years. A person who has already used Chapter 13 and needs to approach a court for Chapter 13 reorganization again only needs to wait two years.
A second bankruptcy might not be the only solution for ongoing financial hardship, and a person could explore potential solutions by talking to an attorney. Legal representation might enable a person to negotiate lower payments with creditors without involving a court. The threat of foreclosure or an inability to meet living expenses, however, could make filing for bankruptcy the best option.
Source: Baltimore Post-Examiner, “Can You Declare Bankruptcy More Than Once?“, Jose Perez, Jan. 31, 2019