Is it Possible to File for
Bankruptcy More Than Once?
April 15, 2022
Bankruptcy allows people to discharge their unsecured debts and obtain a fresh start in life. Though many people fear the mere mention of bankruptcy because they feel it means losing everything, that is rarely the case, especially in Nevada, where residents enjoy generous exemptions that protect assets and possessions from being sold to pay creditors.
Another fear is the stigma of failure, but most filers can get back on their feet fairly quickly after the bankruptcy process is over. However, for those who run up insurmountable debts again – hospital and medical bills are the number-one culprits for high debt loads – is it possible to file for bankruptcy again?
The answer is yes but with limitations. Depending on which type of bankruptcy you filed previously – Chapter 7 or Chapter 13 – there are waiting periods before being allowed to discharge debts again.
If you are facing an unmanageable debt load in or around Reno, Nevada, contact the Law Office of Scott N. Tisevich. With his decades of experience in tax and debt resolution matters, Scott N. Tisevich can discuss the circumstances with you, advise you of your legal options, and then help you navigate the bankruptcy system to get a fresh start.
The Law Office of Scott N. Tisevich also proudly serves clients in Las Vegas, Carson City, and throughout the counties of Churchill, Lyon, Story, and Douglas, Nevada.
Bankruptcy Law in Nevada
Bankruptcy is regulated under federal law, but states can create their own exemptions so their residents can go through bankruptcy and protect what they have in terms of possessions and assets.
In Nevada, for instance, you can retain $605,000 in home equity. So, if you own a home worth $800,000 and you owe $200,000 on your mortgage, your home will not be sold to pay off debts. That sum doubles to $1.21 million if you file with your spouse, who is the co-owner.
You can retain up to $15,000 equity in your car. There are also exemptions for home furnishings and appliances, jewelry and other collectibles, and even a wildcard exemption of $10,000 for anything not otherwise exempted.
However, to qualify for these exemptions, you must have resided in the state for 730 days, basically two years. You also must be a Nevada resident for at least 180 days to even apply for bankruptcy.
Chapter 7 vs. Chapter 13
A Chapter 7 filing is the quickest route to discharge your unsecured debt obligations. Chapter 7 is known as the liquidation option. The bankruptcy court can seize assets that are not covered by the state exemptions alluded to above and sell them to pay off creditors, but for most people, the exemptions will allow them to move forward with most of their possessions in place. This requires that you be current on your secured obligations, such as the mortgage on your house or the loan for your car. If not, the lender can seize them.
There is, however, an income test to qualify for Chapter 7. You must earn less than the median income for a household of your size to qualify. According to the Department of Justice (DOJ), the median income for a single person in Nevada in 2021 was $53,731, and for a family of four, $83,731.
If your income surpasses the means test, then you can use Chapter 13. Under Chapter 13, you can retain all your assets, but your disposable income will be collected by the bankruptcy trustee each month to pay creditors. Disposable income means whatever you have left after meeting all your basic living expenses. The payments will continue for three to five years.
How About Refiling?
There are limits to how soon you can refile for bankruptcy after filing once and having your debts discharged. The basic rule is that you have to wait eight years after first filing and being discharged from Chapter 7 to file again for Chapter 7.
For Chapter 13, the wait is two years, but the repayment plan generally runs for three to five years from the first filing. However, you may have to refile if a sudden financial hardship forces you to do so.
If you filed Chapter 13 and then need to file Chapter 7, the waiting period is six years, but it can be reduced to as little as one year if you've repaid all your debts under Chapter 13 or if you’ve repaid at least 70 percent of them and made a good faith effort to do so.
Again, however, the repayment period is generally three to five years. If your income drops and you qualify for a Chapter 7, you could convert your Chapter 13 petition to a Chapter 7 filing.
In other words, though there are limits time-wise in filing for bankruptcy protection, there is no upper limit on how many times you can file.
How Scott N. Tisevich, Attorney at Law, Can Help
In the wake of the pandemic and with federal relief payments having stopped, more individuals may face mounting debt obligations. Scott N. Tisevich, Attorney at Law, stands ready to examine your financial situation with you and advise you of the best path forward. He can and then help you navigate the complexities of the bankruptcy process to achieve the fresh start you deserve.
If you’re facing financial difficulties that are getting out of control and you live in Reno, Carson City, Las Vegas, or anywhere else in Nevada, contact the Law Office of Scott N. Tisevich today for a free consultation. He also serves clients in the counties of Churchill, Lyon, Story, and Douglas, Nevada.