Massachusetts has no rules about when you can file for bankruptcy, but you should know that bankruptcy is not for everyone. For many people, there is a better alternative. Before you choose bankruptcy or some other option, let a Plymouth bankruptcy attorney evaluate your situation.

If you have already been through the bankruptcy process one or more times, and if you are still having difficulty paying off your debts, the good news is that there is no restriction on how many times you can file for bankruptcy in Massachusetts or any other state.

SHOULD YOU FILE FOR BANKRUPTCY – AGAIN?

However, time limits will apply to when and how often you may have your debts discharged in second and subsequent bankruptcies. Filing for bankruptcy too hastily after discharging debts in a previous bankruptcy can make you ineligible for a second debt discharge.

In other words, filing a second bankruptcy too quickly will probably not help you meet your goals, so it’s important to file at the right time. If you’ll keep reading, you will find out more about:

  1. the right time to file for second and subsequent bankruptcies
  2. your rights and benefits in second and subsequent bankruptcies
  3. why you may choose to file for bankruptcy even when it won’t discharge your debts

WHEN CAN YOU FILE FOR BANKRUPTCY A SECOND TIME?

The two types of personal bankruptcy – Chapter 7 and Chapter 13 – refer to chapters in Title 11 of the United States Code, the complete federal laws of the United States.

  1. In a Chapter 7 bankruptcy, the debtor hands over all of his or her property which exceeds the “exemptions” (what you’re allowed to keep). Non-exempt property is then liquidated to pay debts. You must pass a means test to qualify for a Chapter 7 bankruptcy.
  2. In a Chapter 13 bankruptcy, the debtor submits a plan for paying some or all of his or her debts from current income over a period of three to five years. No means test is required for a Chapter 13 bankruptcy.

If you have already filed once for bankruptcy under Chapter 7, and you received a discharge of your debts, you have to wait eight years before filing a second Chapter 7 bankruptcy. If you filed under Chapter 13, you will have to wait two years before filing a second Chapter 13 bankruptcy.

If your first discharge of debts was filed under Chapter 13, you should wait six years before you file for a Chapter 7 bankruptcy, unless you paid unsecured creditors in full in the first bankruptcy or at least paid seventy percent of the claims in good faith while making your best effort.

If your first discharge of debts was part of a Chapter 7 bankruptcy, you will need to wait four years before you file a Chapter 13 bankruptcy. In some cases, however, you may not really need a debt discharge; you may simply need additional time to pay a debt.

WHEN WILL YOU NEED A BANKRUPTCY LAWYER’S ADVICE?

Suppose, for instance, that you owe for a non-dischargeable debt like a student loan, child support, or federal income taxes. Instead of having your wages garnished for one of those debts, a Chapter 13 bankruptcy would let you “stretch out” those payments over a five-year period.

You could also file a Chapter 13 bankruptcy immediately after receiving a Chapter 7 discharge, giving you more time to pay non-dischargeable debts. However, if you take this approach, you must be advised and guided by the right Massachusetts bankruptcy attorney.

If your debts were not discharged in your first bankruptcy, you may or may not receive a debt discharge in a second bankruptcy proceeding. The right attorney can review your circumstances and provide personalized advice that you will very much need if you file for bankruptcy.

And even if a bankruptcy court dismissed your first bankruptcy effort, unless that court specifically ordered otherwise, you will be allowed to re-file. In some circumstances, you will have to wait 180 days before filing again for bankruptcy after a dismissal.

HOW DOES AN AUTOMATIC STAY WORK IN A SECOND BANKRUPTCY?

Understand that when you file for a subsequent bankruptcy too quickly, you may lose the benefits of your automatic stay – the court order that keeps creditors from harassing you or collecting.

If a prior bankruptcy case was dismissed within a year of a current bankruptcy filing, the automatic stay ends thirty days after the new filing, unless you request and receive a court order that extends the stay. A hearing is usually held to decide if the extension should be granted.

If you’ve had more than one bankruptcy case dismissed in the last twelve months, an automatic stay will not take effect until and unless you request and receive a court order that puts an automatic stay into effect. A hearing is usually conducted to decide if the stay should be granted.

GETTING THE BEST POSSIBLE OUTCOME IN A BANKRUPTCY PROCEEDING

The website for the U.S. Bankruptcy Court for the District of Massachusetts advises: “Repeat filing affects your rights and bankruptcy benefits.” Meeting all of the conditions and deadlines, with your lawyer’s help, is the way to get the best possible outcome in a bankruptcy proceeding.

If you have already been through one or more bankruptcy proceedings, then you know that federal bankruptcy law requires a debtor to receive credit counseling prior to filing for bankruptcy relief and to complete a financial management course after filing.

HOW WILL THE RIGHT ATTORNEY HELP YOU?

After evaluating your finances and speaking with you personally, a good bankruptcy lawyer will be able to recommend a Chapter 7 bankruptcy, a Chapter 13 bankruptcy, or an alternative to bankruptcy. In some cases, an attorney may recommend taking no action at all, at least for now.

If bankruptcy is your option, you will be able to keep some of your most important possessions as exemptions. How exemptions are determined is complicated in Massachusetts, but a good lawyer will explain the details and protect your rights at every stage of a bankruptcy proceeding.

No two bankruptcy cases are ever identical. If you believe that a first, second, or subsequent bankruptcy is your best choice, you’re going to need personalized legal advice from a Plymouth bankruptcy attorney who routinely handles bankruptcy cases in this state. That is your right.