Although you'd hope that a single bankruptcy is all that you would ever need, if you ever DO need that relief again it's good to know when it does become available.
Did You File Bankruptcy During or Right Before 2005?
More than two million bankruptcies were filed in 2005-much more than in any year before or since then. This occurred even though the California and U.S. economies were doing quite well, especially compared to the devastating Great Recession which started two, three years later.
That's because this unusual increase in bankruptcy filings was related not so much to the state of the economy than to the federal Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), which went into effect on October, 17, 2005. This was the biggest "reform" of the bankruptcy laws since the late 1970s. The legislation had been kicking around Congress for years, and in fact a different version had actually passed earlier but President Bill Clinton refused to sign it into law. But this time around it passed Congress and President George W. Bush signed it into law in the spring of 2005, with an effective date of 6 months later. All this advance publicity about a tougher law, together with the new certainty that the law finally was going to go into effect, convinced a record-breaking number of people to file beforehand.
Imagine-more people filed bankruptcy during the first 16 days of October 2005, the final days before the change in the law, than in the entire year of 2006!
The Timing Rules
Are you one of those two million or so people who filed bankruptcy during 2005 before the law change, but now unfortunately have new financial problems? If so, most likely you can file another bankruptcy case now or shortly.
When you can file a new bankruptcy depends on the Chapter of bankruptcy you filed under before (Chapter 7, 11, 12 or 13), and what Chapter you will file now. Here are the timing rules:
A. If you are filing a Chapter 7 case now, and-
1. Your prior case was under Chapter 7 or Chapter 11, you must wait 8 years from the date your prior case was filed to the filing date of your new Chapter 7 case.
2. Your prior case was under Chapter 13, you must wait 6 years from the date your prior case was filed to the filing date of your new Chapter 7 case. There's a possible exception here: there is no wait at all if in that prior Chapter 13 case you paid 100% of your debts, or paid at least 70% and met some other conditions.
B. If you are filing a Chapter 13 case now, and-
1. Your prior case was under Chapter 7, 11, or 12, you must wait 4 years from the date your prior case was filed to the filing date of your new Chapter 13 case.
2. Your prior case was under Chapter 13 case, you must wait 2 years from the date your prior case was filed to the filing date of your new Chapter 13 case.
(Note: Chapter 11s are usually for reorganizing a business, but they can be filed by consumers who have a very large amount of debt. Chapter 12s are like Chapter 13 except specialized for farmers and fishermen.)
Important: Filing Dates Count, Not the Date of Discharge
Notice that the date that starts and ends all these time periods are the case filing dates-the date that STARTS the case, NOT the date the debts were discharged at or near the end of the case. Since the filing date is at least months earlier, and can be years earlier, than the discharge date, this is a very important, and often very helpful, distinction.
BUT IF No Discharge in the Prior Case, NO Waiting Period
I'll talk about this in detail in the next blog, but for now be aware that for any of these waiting periods to apply there must have been a discharge of your debts entered in that prior case. If there wasn't, you can file a new bankruptcy at any time.
What This All Means If You Filed Bankruptcy Shortly Before, Or During, 2005
Since 2005 was 8 years ago, if you filed a Chapter 7 case then AND completed it successfully so that your debts were discharged, you can file a new Chapter 7 case this year as of the day after the date you filed your case in 2005. So, for example, if you filed before on May 1, 2005, you can now file a new Chapter 7 case on May 2, 2013.
Under any other combination of prior and new Chapters of bankruptcy-prior Chapter 7 to new Chapter 13, prior Chapter 13 to new Chapter 7, etc.-the shorter 2, 4, or 6 year rules apply. So in all combinations other than prior Chapter 7 to new Chapter 7, if you filed your prior case in 2005, then the waiting period ended a while ago and you can file a new bankruptcy case now.