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What are the consequences of re-filing for personal bankruptcy?

Unfortunately, there are times when a debtor's bankruptcy case in Massachusetts will be dismissed. When this happens, the debtor will be restored to the same financial situation that he or she was in prior to filing for bankruptcy, without obtaining any form of debt relief. Obviously this is not the outcome that the debtor wanted and he or she may consider re-filing for bankruptcy. However, debtors should understand that there are consequences that stem from re-filing for bankruptcy.

When a debtor files for bankruptcy, whether it is pursuant to Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code, the Court issues an automatic stay that will continue either until the case is dismissed or the bankruptcy process is completed. The automatic stay puts a halt to a creditor's ability to collect on the debt. However, if a person re-files for bankruptcy within one year of his or her first filing, the automatic stay for the second filing will last for only 30 days. In addition, if this is the third filing in the past year, there will be no automatic stay issued by the Court at all.

There are also legal limits on how many discharges in bankruptcy a debtor can receive. If a debtor filed for Chapter 13 bankruptcy and his or her case was discharged, the debtor may only re-file for Chapter 13 bankruptcy and receive a subsequent discharge if it has been at least two years since the initial Chapter 13 bankruptcy filing or at least four years since filing for any other type of bankruptcy, including Chapter 7. If the initial discharge was for a Chapter 7 bankruptcy filing, then the debtor must wait eight years before re-filing for bankruptcy.

There are numerous reasons why a bankruptcy proceeding will be dismissed. Perhaps a filing deadline is missed, credit counseling is not received or the appropriate documents are not filed with the Court. Whatever the reason, debtors may have good reasons to re-file for bankruptcy. However, before doing so, they should make sure they understand all of the consequences that may apply to them in these situations. Consulting with a professional may help.

Source: United.States Bankruptcy Court for the District of Massachusetts, "A Guide for the Self-Represented Debtor in a Bankruptcy Case," accessed Nov. 10, 2014

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