Filing for Bankruptcy Multiple Times in Sterling Heights
Bankruptcy helps people start over by wiping out or paying back their debts under the care of the bankruptcy court. You can file for bankruptcy more than once in Sterling Heights, Michigan. But, there are rules and time limits for filing again based on the kind of bankruptcy you filed before and the one you plan to file next.
The Waiting Period
People who owe money need to consider the time they have to wait between filing for bankruptcy again. The waiting period changes based on the type of bankruptcy filed before and the one they want to file next.
Income Requirements
Another thing to think about is the income rules for qualifying for bankruptcy. In Michigan, the average yearly salary is $49,560. If the debtor’s income exceeds this average, they will need to pass the means test in order to qualify for Chapter 7 bankruptcy. If not, they might need to choose Chapter 13 bankruptcy, which provides a plan to repay based on income and expenses. [1]
Creditor Challenges
Creditors might make things tough when someone files for bankruptcy more than once. They could argue that some debts should not be wiped out because they were not included before or the debtor did something wrong. It is really important to gather all the papers needed and use a bankruptcy lawyer to handle these problems well.
Court Review
When someone files for bankruptcy more than once, they must follow the specific rules. The court looks closely at their finances to make sure everything is right and honest. If they do not follow the rules or lie, their case could be thrown out, or they might get into legal trouble.
Types of Bankruptcy Available in Michigan
In Michigan, debtors and businesses facing overwhelming debts have several options when it comes to bankruptcy, including Chapter 7, Chapter 13, and Chapter 11.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also called liquidation bankruptcy, is for people with little money to pay back what they owe. Usually, this kind of bankruptcy lets people get rid of most debts like credit card bills and medical costs, but they might lose some property that is not protected. To be able to file for Chapter 7 in Michigan, people need to pass the means test, which checks their income against the state’s average income. [2]
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is different because it helps people with enough income to pay back part of their debts over three to five years. Instead of selling things, this type lets people make a plan to pay back what they owe and keep their stuff. To be eligible for Chapter 13 in Sterling Heights, a person needs a steady income and unsecured debts below a limit set by the court.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is mostly for businesses, but people with lots of debts or assets can use it too. It lets them reorganize their debts and pay them back over a long time, usually several years. Chapter 11 gives more options than other types, but it is complicated and costs a lot, often needing lawyers to help out.
Time Frames for Filing Bankruptcy Multiple Times in Sterling Heights
Filing for bankruptcy more than once has some rules to stop people from misusing the system and to encourage good debt management. These rules change based on the kind of bankruptcy and where you are.
The Federal Law
In the U.S., federal law has rules about filing for bankruptcy more than once. The Bankruptcy Code says that people usually cannot get their debts wiped out in a second bankruptcy if they have already been discharged from a previous one within a certain time. This time period changes depending on the types of bankruptcy filed before and the one being asked for now.
Chapter 7 Waiting Period
In Michigan, both state and federal laws control how long you must wait to file for bankruptcy again and what you need to do. If someone wants to file for Chapter 7 again, they have to wait 8 years from when their last Chapter 7 was discharged. But, if they had a Chapter 7 before and now want to file for Chapter 13, they need to wait 4 years from the date of the last Chapter 7 discharge. [3]
Chapter 13 Waiting Period
If someone wants to file for a second Chapter 13 bankruptcy, the wait time is shorter. When a person has received a discharge from a prior Chapter 13 case, they must wait at least 2 years before filing another Chapter 13 case to get a discharge. But, if they had a discharge from Chapter 7 before, they need to wait 6 years before applying for Chapter 13 bankruptcy relief.
If you are filing for a second bankruptcy, remember these wait times for getting debts wiped out. Even if you cannot get a discharge, you might still be able to start a new case, and the automatic stay could offer some short-term protection from creditors. [3]
The Effect of Multiple Bankruptcies in Sterling Heights
Multiple bankruptcies can have negative effects on the debtors as follows:
Creditworthiness
Multiple bankruptcies can hurt how lenders see your ability to repay. They are like big red marks on your credit record. Every time someone declares bankruptcy, it stays on your credit report for many years, making the problem worse.
Bankruptcies can really hurt your credit scores. These scores show how likely you are to repay debts, and if you have bankruptcies, your score can drop a lot. When your credit score is low, it is harder to get loans or credit cards because lenders think you might not pay them back. If you do get a loan, it may be at a much higher interest rate.
Financial Situation
When lenders look at your credit after bankruptcy, they check many things. They see how many times and when you went bankrupt. If it happens frequently, it shows trouble managing money, so lenders do not want to give you credit.
Debtor Circumstances
Lenders also check if you are trying to improve your credit. They look for on-time payments of debts or if you are using secured credit cards. Additionally, they think about the reasons for bankruptcy, whether it was due to something unexpected or just bad money management.
If you’re interested in filing for bankruptcy in Sterling Heights (even if not for the first time), contact the experienced bankruptcy attorneys at Frego Law today.
FAQs
You can file for bankruptcy multiple times; however, there are mandatory waiting periods between filings. [3]
Filing for bankruptcy multiple times can severely impact your credit score and financial reputation. It may also make it more challenging to obtain future credit or loans. [4]
Sources:
[1] Salaries: What is the Average Salary in Michigan? (May 2024). (2024). ZipRecruiter; ZipRecruiter. https://www.ziprecruiter.com/Salaries/–in-Michigan
[2] Means Testing. (2015, May 7). www.justice.gov. https://www.justice.gov/ust/means-testing
[3] Multiple Bankruptcy Filings: When Can You File Again? (n.d.). Www.nolo.com. https://www.nolo.com/legal-encyclopedia/multiple-bankruptcy-filings-when-file-again.html
[4] Luthi, B. (2017, January 25). Bankruptcy: How it Works, Types & Consequences | Experian. Experian.com. https://www.experian.com/blogs/ask-experian/credit-education/bankruptcy-how-it-works-types-and-consequences/
