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HOW MANY TIMES CAN I FILE KENTUCKY BANKRUPTCY?

FILING BANKRUPTCY AGAIN: HOW LONG DO I NEED TO WAIT?

How long one must wait in between bankruptcy filings depends upon the type of bankruptcy and the outcome of the previous bankruptcy.

1. Chapter 7: In order to be eligible to file Chapter 7 Bankruptcy in Kentucky and receive a discharge, the bankruptcy filing must occur more than 8 years after the filing of a previous Chapter 7 or Chapter 11 case in which the debtor received a discharge. Prior to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which was adopted on October 17, 2005, the time period was 6 years. Keep in mind that the 8 years runs from the date of the filing of the previous Chapter 7 bankruptcy case, not the date of discharge. Furthermore, the rule does not apply if the prior case was dismissed rather than discharged.

In the case where the debtor files a Chapter 7 case and had a previous Chapter 13 case in which a discharge was received, the rule is slightly different. In that case, in order to receive a discharge, the prior Chapter 13 case must have been commenced more than 6 years before the filing of the current Chapter 7 case, unless payments under the plan in the prior Chapter 13 case totaled at lease: (A) 100 percent of the allowed unsecured claims in such case; or (B) 70% of such claims; and the plan was proposed by the debtor in good faith and was the debtor’s best effort. This last requirement seems somewhat redundant because in order for the Chapter 13 plan to have been approved in the first place, the court would have had to find it to be filed in good and and the debtor’s best effort. For this is a requirement for confirming any Chapter 13 plan.

2. Chapter 13: In order to be eligible to file Chapter 13 Bankruptcy and receive a discharge, the bankruptcy filing must be commenced more than 4 years following the filing of a prior Chapter 7 Bankruptcy case in which the debtor received a discharge. It is important to note, however, that this rule does not prevent the filing itself, but merely the obtaining of a discharge, and unlike Chapter 7, where the lack of a discharge makes the filing pointless, there may be reasons to file Chapter 13 where one is not eligible for a discharge. For example, if one is filing Chapter 13 Bankruptcy to cure his mortgage default and save his Kentucky home, then a discharge may not be that important. For in that case one doesn’t need a discharge to achieve his goals since he is merely reinstating and paying, rather than discharging, his mortgage loan. The same may be true where the Chapter 13 bankruptcy is being used to reorganize tax debt or student loan debt that is not dischargeable anyway. Since the debtor still gets the benefit of the automatic stay, the Chapter 13 filing will still provide the benefit that the debtor needs.

These discharge rules can be rather tricky. If you have questions, consult with a competent Kentucky or Indiana Bankruptcy Attorney.

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