The United States Bankruptcy Code permits individuals to file for bankruptcy in certain circumstances. The Bankruptcy Code has many provisions and many avenues under which a person or business entity may file for bankruptcy. Chapters 7, 11, and 13 are the most common. Chapter 12 is probably next in line but is far behind in frequency of filings.

Each chapter provides a different remedy to the financial dilemma of the debtor. One chapter will provide for the elimination of all or most debt with others merely allow reorganization or restructuring in order to repay current debts over time.

Compare and Understand the Different Options for Filing Bankruptcy

It is important in determining which type of bankruptcy to file to understand the benefits and limitations of each. It is also important to understand the relief each provides. It is also important to compare the benefits, limitations, and relief provided to the debtor’s unique financial circumstances in order to determine which is best.

Filing under one chapter may be best for one person while filing under another chapter is best for another person. Businesses, of course, have completely different considerations to take into account.

In addition to the above, it is also important to determine the best timing for a bankruptcy filing. This is because there are limitations on the timeframe in which a business or individual may file a second time for bankruptcy. It is important to be aware of these limitations in determining when to file for bankruptcy.

Limitations on Filing Bankruptcy a Second Time

If a person has already filed a bankruptcy petition, the court will not permit filing again until a certain amount of time has passed.

  • The court will deny a discharge in a later chapter 7 case if the debtor received a discharge under chapter 7 or chapter 11 in a case filed within eight years before the second petition is filed.
  • The court will also deny a chapter 7 discharge if the debtor previously received a discharge in a chapter 12 or chapter 13 case filed within six years before the date of the filing of the second case unless (1) the debtor paid all “allowed unsecured” claims in the earlier case in full, or (2) the debtor made payments under the plan in the earlier case totaling at least 70 percent of the allowed unsecured claims and the debtor’s plan was proposed in good faith and the payments represented the debtor’s best effort.
  • A debtor is ineligible for discharge under chapter 13 if he or she received a prior discharge in a chapter 7, 11, or 12 case filed four years before the current case or in a chapter 13 case filed two years before the current case.