How Many Times Can You File for Bankruptcy?

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Unless a bankruptcy court deems otherwise (more on this below), there is no limit to the number of bankruptcy cases that an individual can file. However, where restrictions come into the picture is with respect to the length of time that must pass between filings. To make things a little more complicated, the restrictions are also based on the type of bankruptcy filing (i.e. chapter).

Currently, here are the rules:

Chapter 7 to Chapter 7

If an individual previously filed for chapter 7 bankruptcy and received a discharge, then they must wait 8 years from the date of the previous filing (not the date of discharge) before they can file again for chapter 7 bankruptcy.

Chapter 13 to Chapter 13

If an individual previously filed for chapter 13 bankruptcy and received a discharge, then they must wait 2 years from the date of the previous filing (not the date of discharge) before they can file again for chapter 13 bankruptcy. With this being said, most chapter 13 bankruptcy filings are linked to a repayment plan that lasts for 3-5 years. As such, practically speaking, most people can file for chapter 13 bankruptcy immediately after their previous chapter 13 filing closes (since for them the 2-year waiting period would have entirely passed).

Chapter 7 to Chapter 13

If an individual previously filed for chapter 7 bankruptcy and received a discharge, then they must wait 4 years from the date of the previous filing (not the date of discharge) before they can file again for chapter 13 bankruptcy. This approach (filing for chapter 7 bankruptcy and then filing for chapter 13 bankruptcy) is commonly and informally called “chapter 20 bankruptcy,” and is sometimes sought by individuals who need help paying off key debts, or have the opportunity to get caught up on missed mortgage and/or car payments.

Chapter 13 to Chapter 7

If an individual previously filed for chapter 13 bankruptcy and received a discharge, then they must wait 6 years from the date of the previous filing (not the date of discharge) before they can file for chapter 7 bankruptcy. However, the 6-year waiting period does not apply if during the chapter 13 proceedings the individual paid back all of their unsecured debts, or they paid back at least 70 percent of their unsecured debts and their repayment plan was deemed by the court to be proposed in good faith and executed with the best of intentions and efforts.

Extensions to the Waiting Period

As noted above, the court may extend the amount of time that an individual must wait before filing a new bankruptcy case. This is referred to as dismissing a case with prejudice (as opposed to dismissing a case without prejudice, in which case there would be no additional filing restrictions).

The court may dismiss a case with prejudice if it deems that an individual:

Willfully failed to obey court orders. Filed multiple bankruptcy cases in an attempt to delay creditors. Attempted (regardless of success) to abuse the bankruptcy system. Committed (or attempting to commit) bankruptcy fraud by hiding assets or lying in any of their submissions or statements.

In cases that involve severe transgressions, the court can permanently ban an individual from discharging debts that were earmarked for discharge in a case that was dismissed with prejudice.

For example, if $10,000 in medical debt was going to be discharged per a chapter 7 bankruptcy filing, but the court later discovered that the individual filing the case knowingly hid assets in order to prevent them from being liquidated by the trustee, then that $10,000 in medical debt could be blocked from being discharged in any future bankruptcy filing. The individual would therefore have to pay it either by settling in some way with the creditor, or by obeying a court order per a civil lawsuit filed by the creditor.

Learn More

To learn more about bankruptcy filing rules and for a clear picture of all available options that are at your disposal, contact the Law Office of Charles H. Huber. We have over 30 years of experience filing bankruptcy cases.

Buying a Car After Bankruptcy: What You Need to Know

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One of the most common questions — and indeed, major fears — that people have when they think about filing for bankruptcy, is whether they’ll be able to buy a car in the foreseeable future.

At the same time, what makes this issue even more confusing and distressing, is that there is a great deal of misinformation out there; especially online, where some companies and consultants that provide so-called “debt solutions” do everything they can to convince people that filing for bankruptcy is basically like entering a financial black hole: you go in, but you never come out.

And so, to help separate fact from fiction and give you a clearer picture of the future will look like, here is what you need to know about buying a car after bankruptcy:

You may be able to buy a car in cash.

You may (and probably will) discover that after filing for bankruptcy you have more disposable income and overall savings — especially if your wages were previously being garnished, or you were paying exorbitant interest rates to service some of your debts. As such, while purchasing a new car might not be realistic (the average price of a new car is just over $36,000), you might be able to comfortably afford a used car, or as dealerships and salespeople like to put it, “a previously enjoyed car.” Either way, as long as it’s safe, reliable and fits your lifestyle, it’s good news for you!

You may be able to qualify for car financing.

If new and used car dealerships put up a stop sign every time they encountered a prospective customer with a bankruptcy in their past (including their recent past), then car sales would plunge to catastrophic levels and the government would probably have to step in with yet another bailout. In other words: dealerships gladly sell many cars to folks with bankruptcies in their past. After all, consumer bankruptcy is common, with around 800,000 filings every year.

In addition, financing your car — and of course, making your required payments on time and in full — will help rebuild your credit score, and demonstrate to future creditors that you’re while you’re driving around, your credit score will be on the rise.

With all of this in mind, it’s wise and often necessary to wait until your bankruptcy case has been discharged before applying for car financing (note that if you file for chapter 13 bankruptcy, then during your 3-5 year repayment plan you can request that the court appointed trustee gives you permission to get car financing). Also, generally speaking, the longer you wait after discharge, the lower the interest rate you’ll be offered.

You may benefit from “swap leasing.”

Right now, there are thousands of people who are eager — and some are desperate — to get out of their car lease. They may need to get a different kind of car, they may no longer need their car, they may no longer be able to afford their car . . . and the list goes on.

Swap leasing is when you take over someone else’s car lease to everyone’s mutual benefit. Often, the other person will provide incentives to make the deal more attractive, such as agreeing to cover two or three month’s worth of lease payments.

Just remember to get all of the details before agreeing to a swap lease agreement. For example, ensure that any pre-existing warranty will transfer over to you, and so on.

The Bottom Line

Don’t get misled by so-called “debt consolidation consultants” who say that getting a car after bankruptcy is an impossible ordeal. They don’t want you to file for bankruptcy in the first place, since that means they’ll lose a customer. As always get the facts you need to make an informed decision that’s best for YOU.

Learn More

To learn more contact the Law Office of Charles H. Huber. We have over 30 years of experience filing consumer bankruptcy cases.

Here’s the Absolute WORST Thing Some People Do when Filing for Bankruptcy

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On the road toward and beyond a bankruptcy filing, there are many dos — and even more don’ts. This isn’t because bankruptcy is a dangerous minefield that threatens to destroy people at every turn.

Rather, it’s because the amount of myths, misinformation an outright lies regarding bankruptcy is staggering. It’s even more shocking considering that we aren’t talking about vacation destinations or what kind of car to buy. Yes, there is a lot of lousy advice out there, and bad decisions are costly and stressful.

But filing for bankruptcy is an entirely different matter. Mistakes can, and often do lead to lasting damage — and in extreme cases, criminal prosecutions. And that leads us to the absolute WORST thing that some people do when filing for bankruptcy (to be fair, they are often convinced to do this by someone who they are going to hate in the near future when the mistake is discovered and the dire consequences set in).

Let’s hit the spotlight and reveal the number one thing that you — and anyone you care about — should never even think about doing, regardless of what you read or hear: run up your credit card debt prior to a bankruptcy filing.

There are two fundamental reasons why this a jaw-droppingly bad move:

It’s totally unethical.

Apologies to all of the Robin Hood fans out there, but stealing from the rich (i.e. big companies) isn’t ethical. It’s more sophisticated and may seem less harmful than walking up to someone in the street and stealing their purchase or grabbing someone’s keys and driving away in their car, but it’s essentially the same thing. Theft is theft.

It’s not going to work.

Creditors and especially court-appointed bankruptcy trustees are not stupid, and they are absolutely on the lookout for this kind of scheme. Remember, these are not cash purchases. Everything is tracked and traced, right down to the last cent.

Specifically, transactions for luxury goods or services totaling $650 or more within 90 days immediately prior to filing for bankruptcy will be presumed fraudulent. Of course, this may not be the case, but it will be up to filers to establish otherwise by demonstrating that the expenses were legitimate and necessary (e.g. getting new brakes on a car to make it roadworthy 60 days before a filing is not the same thing as buying the latest iPad a week before filing). The same presumption of guilt applies to any cash advances of at least $950 within 70 days immediately prior to filing for bankruptcy.

If filers cannot demonstrate that the transactions were legitimate and compliant, they will face the wrath of the legal system. For starters, their bankruptcy case will be dismissed. Then, creditors will go into attack mode and tack on interest penalties based on the date that the case was filed. Third, they will be prevented from re-filing for bankruptcy — and even when the ban is lifted, they may not be able to seek protection on previous debts. Lastly, they may be subject to criminal prosecution, which can lead to fines and in extreme (but not unheard of) cases, imprisonment.

The Bottom Line

If anyone is urging you to “game the system” by running up your credit cards prior to a bankruptcy filing, then consider yourself very, very fortunate that you’re reading this article now vs. after you’ve made that incredibly bad mistake. And if a friend or relative is thinking about heading down that road, send them this article and say “you’re welcome!”

Learn More

To learn more contact the Law Office of Charles H. Huber. We have over 30 years of experience filing consumer bankruptcy cases.

How Long After Bankruptcy Can You Buy a House?

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How Long After Bankruptcy Can You Buy a House?

If you are considering filing for bankruptcy, or have already decided that doing so is in your best financial interests, then one of the most important questions you may have is: how long after bankruptcy can I buy a house?

Here’s the short and stress-relieving answer: it will probably not take as much time as you think — or as you dread!

Now for the longer explanation: it is true that a chapter 7 bankruptcy will remain on your credit report for 10 years, while a chapter 13 bankruptcy will remain on your credit report for 7 years. However, it is NOT true that you need to wait 7-10 years after a bankruptcy filing (depending on the chapter) to get a loan to buy a home. Here are some of the options that may be available to you much sooner than you think:

Federal Housing Authority (FHA) Loan

Generally, you can apply for an FHA loan two years after the date of your bankruptcy discharge. If you file for chapter 7, this could be in about 2.5 years from the date of filing. If you file for chapter 13, this could be in about 3.5-5.5 years (this is because in chapter 13 bankruptcy, you must adhere to a court-approved repayment plan that lasts for 3-5 years before discharge).

However, depending on the details of your bankruptcy case, you may be able to apply for an FHA loan 12 months after discharge instead of 24. To qualify for this exception, you must demonstrate two things: that you filed bankruptcy through no fault of your own (e.g. excessive medical debt), and that you have handled your financial responsibilities property since filing for bankruptcy.

United States Department of Agriculture (USDA) Loan

A low-interest USDA loan may be available to you if you are in a low or middle-income bracket, and are willing to purchase a home in a rural community.

If eligible, you can apply for a USDA loan three years after getting discharged from chapter 7 filing, or 12 months after discharged from chapter 13 bankruptcy. As with FHA loans, if you can demonstrate that your bankruptcy filing was through no fault of your own, then you may qualify for an exception that would allow you to apply for a USDA loan 12 months after discharge. More information on this program is available here.

Veterans Affairs (VA) Loan

If you are a veteran, then you may qualify for a VA loan to meet your housing needs. There is no down payment requirement, and you may use the loan program multiple times. To qualify, you will need to demonstrate that you have paid your bills on time and without issue for two years after discharge (from either chapter 7 or chapter 13). More information on this program is available here.

Conventional Mortgage

You can also apply for a conventional mortgage from a private lender. If you file for chapter 7 bankruptcy, then you’ll be eligible 2 years after discharge if the bankruptcy was beyond your control, or 4 years after discharge if it was due to financial mismanagement. If you file for chapter 13 bankruptcy, then you’ll be eligible 2 years after discharge, or 4 years after dismissal (i.e. if you fail to complete the repayment plan).

Also keep in mind that the government does not insure private conventional mortgages. As such, you’ll be required to pay mortgage insurance in addition to the loan’s carrying costs (principal plus interest). The good news is that once you have 20 percent equity in your home, you’ll typically be allowed to stop the insurance payment.

The Bottom Line

Each year, hundreds of thousands of people across the country file for chapter 7 or 13 bankruptcy, and typically within two years — and in some cases, within 12 months — they’re back on-track toward buying a home. They are achieving their home ownership dreams after bankruptcy, and so can you!

Learn More

To learn more contact the Law Office of Charles H. Huber. We have over 30 years of experience filing consumer bankruptcy cases.

What is Bankruptcy Fraud?

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Statue Of Lady Justice

On the spectrum of unlawful activities, bankruptcy fraud may not be the most egregious crime, but it it’s nevertheless a major transgression. Indeed, any belief that the police or courts view bankruptcy fraud as minor offense is absolutely false. It is a serious crime with severe penalties that can include incarceration.

Generally, there are four types of bankruptcy fraud: concealing assets, providing false information, multiple filings, and bribery. Let us briefly look at each one below.

Concealing Assets

Concealing assets is the most common type of bankruptcy fraud, and is committed by filers who want to prevent assets from being liquidated by creditors (via the trustee). Keep in mind that concealing assets is not limited to deliberately keeping them off a list of assets. Transferring assets (physical items or cash) to family members, friends, or any other party with the intention of circumventing the rules — and therefore breaking the law — qualifies as bankruptcy fraud.

Providing False Information

It is potentially a criminal offense to lie or withhold information on a bankruptcy filing that, if disclosed, would lead to adverse consequences for the filer (e.g. stating that annual income is lower than it actually is, in order to pass the Chapter 7 means test).

The word “potentially” is important above, because while making a mistake in a bankruptcy filing is obviously not something the courts treat lightly, they do realize that good-faith errors can happen. For example, a filer may legitimate forget that a relative owes them $1,000 for a loan that was made years ago.

As we have written about previously, a filer who notices an error, or who has an error brought to their attention, should immediately rectify it and explain the circumstances. Doing nothing and hoping that the error does not come to light is not just a bad idea, but it is technically illegal.

Multiple Filings

Even if the information is correct, it is a violation of bankruptcy rules to submit multiple bankruptcy filings in different jurisdictions (and if the information is false, then it would almost certainly meet the threshold for a criminal violation as well).

Bribery

Bribery is arguably the most serious of all types of bankruptcy fraud, as it involves the criminality of someone with the power to influence a case, such as a court-appointed trustee. Keep in mind that bribery in this context is not limited to a cash transaction. Providing, or promising to provide, any benefit to a third party in exchange for an ill-gotten gain (regardless of the gain is ultimately realized it not) still constitutes fraud.

The Consequences

As noted above, the consequences of bankruptcy fraud are severe. Under U.S.C. Chapter 9, a conviction carries a sentence of up to five years in prison (not jail), and/or a fine up to $250,000. In addition, victims of bankruptcy fraud may also seek civil remedies to compensate them for their losses.

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It goes without saying that you have no intention of committing bankruptcy fraud.

However, you may be concerned about making a mistake in your filing; you may be getting some potentially dubious advice from a family member, friend, or so-called “expert”; or you may have a family member or friend who you fear is about to make an extremely large and probably catastrophic mistake, and you want them to get a wise second opinion.

If any of the above applies to you, then contact the Law Office of Charles H. Huber. We have over 30 years of experience filing consumer bankruptcy cases. Our experience is your advantage!