"If a company files Chapter 7 bankruptcy, its assets are liquidated to pay creditors, so it can really only do that once, " Langdon says. "When a company files a Chapter 11 bankruptcy, it can have a plan approved that discharges its debts once the plan is confirmed, as long as the company continues in business. It could then file another Chapter 11 bankruptcy and get rid of any new debts by having a new plan approved. While this could happen several times over the life of a business, it rarely happens more than two or three times because of the expense and inability to get credit after several bankruptcies. " The decision to file bankruptcy a second (or third or fourth) time is rarely an easy one. Ensuring that you understand the process and how it will impact you can greatly reduce stress and anxiety, allowing you to focus on what's important: your business. Fortunately, most bankruptcy attorneys offer a free initial consultation to help you determine your rights and options if you are considering filing again.
But what if you want to "mix and match"? Switching Between Chapter 7 and Chapter 13 Bankruptcy It's entirely possible that your first bankruptcy was a Chapter 7, and now you're thinking of switching to Chapter 13 (or vice versa). Does that affect the waiting period for a discharge? The short answer is yes, it does. If your first bankruptcy was a Chapter 7, and you want to file a Chapter 13, you cannot receive a Chapter 13 discharge on the second bankruptcy until at least four years have passed. If your first bankruptcy was a Chapter 13, and you want to file a Chapter 7, you cannot receive a Chapter 7 discharge on the second bankruptcy until at least six years have passed. However, there are two exceptions to this rule: You successfully paid all of your unsecured creditors during your first bankruptcy. Unsecured creditors are creditors who are not "secured" by collateral. (For example, a mortgage lender would be a secured creditor, because the loan is secured by the home. ) You successfully paid off a minimum of 70% during your first bankruptcy, and demonstrated good faith.
Life circumstances sometimes go beyond your control, and if you experience multiple medical emergencies or job losses, it may become necessary to file for bankruptcy on more than one occasion. However, as our Philadelphia bankruptcy attorneys will explain, the timing of your second bankruptcy case is critically important and must be planned carefully. If you choose the wrong moment to file for bankruptcy a second time, the consequences for your case could be disastrous. Can You File for Chapter 7 or Chapter 13 Bankruptcy More Than Once? The short answer to this question is yes, it is possible for a Pennsylvania resident to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy more than one time. The long answer, of course, is more nuanced. Technically speaking, you may file for bankruptcy as many times as you wish – but remember, filing for bankruptcy is not the same as having your bankruptcy case discharged, which is the ultimate goal of any filer. Filing for bankruptcy is merely the first step of the process.
If it sees fit, however, the court may extend this period to up to 18 months. The purpose of the reorganization plan is to prioritize certain debts and creditors by placing them into different classes. Unsecured claims, for example, would be in their own class. If you believe that filing Chapter 11 bankruptcy may be the best option for your business, it is in your best interest to speak with an attorney who specializes in bankruptcy law. Exceptions to the rules There are exceptions to the guidelines above, however. For example, time requirements may be reduced if you paid 100 percent of unsecured claims (or 70 percent in a good faith plan) in your Chapter 12 or 13 bankruptcies. On the other hand, Chapter 11 and 12 guidelines might not be as easy and straightforward as stated above if you violated a court order or had a case dismissed during the 180 days preceding your bankruptcy filing. In either of these situations, you may not immediately qualify for another discharge. Talk to an attorney According to Dean A. Langdon of DelCotto Law Group in Lexington, Kentucky, costs and credit issues often prevent businesses from filing bankruptcy over and over again.