Bankruptcy

• Bankruptcy is a means for individuals with financial problems to obtain legal relief from their debts. Sometimes, the relief comes at a great price, such as with a Chapter 7, where some debtors must give up valuable property to obtain relief from creditors. Other times, bankruptcy relief requires a long-term commitment, such as in a Chapter 13, where debtors spend three to five years paying back their debts through a court-approved payment plan. In either case, time limits for receiving another discharge exist to keep individuals from abusing the bankruptcy system.
  
  

Discharge

• Other than the automatic stay, which is the aspect of bankruptcy that stops creditor collection activities, the discharge is one of the key benefits of bankruptcy. Receiving the bankruptcy discharge means no longer being legally responsible for dischargeable debts. Once a person receives a discharge, there are limitations on when he may seek another one. The time limit depends on the type of bankruptcy filed.
  
  

Chapter 7 Discharge

• Chapter 7 debtors typically receive a discharge within four to six months from the date they file. Following a Chapter 7 discharge, a debtor must wait eight years before he may receive another Chapter 7 discharge. Alternatively, a former Chapter 7 debtor may not receive a subsequent discharge in a Chapter 13, for four years following the date he filed the previous Chapter 7.
  
  

Chapter 13 Discharge

• Chapter 13 is the bankruptcy option that allows filers to keep their property and get caught up on past due payments via a payment plan. A debtor who received a Chapter 13 discharge in the previous bankruptcy, and wishes to receive a subsequent Chapter 7 discharge, must generally wait six years, unless certain exceptions apply. One such exception would be if the debtor repaid 100 percent of his unsecured debts in the Chapter 13 plan. Alternatively, if the debtor’s previous discharge was through a Chapter 13, and he wishes to receive another Chapter 13 discharge, he must wait two years.