My Bankruptcy Was Dismissed When Can I File Again

11 Min Read | Feb 3, 2022

You're sitting at the kitchen table, staring downwardly collection notices and wondering how you're going to make things piece of work. Maybe yous've recently lost your task and the debt is piling up to an overwhelming amount. And and so you recall information technology—that word y'all never idea you'd accept to consider: bankruptcy.

Sometimes your situation seems and then hopeless that bankruptcy looks similar your merely option. We know you might experience scared and backed into a corner, but bankruptcy isn't a decision to make lightly. Information technology's important to know exactly what bankruptcy is and what the different types of bankruptcies are then you can make the best decision for your situation.

What Is Bankruptcy?

More than merely a way to lose a game of Monopoly, bankruptcy in real life is a lot more than serious: Information technology'south when yous go before a approximate and tell them you lot can't pay your debts. Then, depending on the state of affairs, they either erase your debts or make a plan for y'all to pay them dorsum. There are several reasons why people file for bankruptcy—things like a task loss, a divorce, a medical emergency or a decease in the family. In fact, more than 730,000 nonbusiness bankruptcies were filed in 2018.ⁱ That's crazy!

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But bankruptcy is a major life event that affects more than only your finances. It can follow you when y'all're trying to employ for a job, buy a firm, or start a business. Even though people might see it as a "fresh start," defalcation but treats the symptoms, not the problem.

It's besides important to know that bankruptcy doesn't clear student loans, government debts (taxes, fines or penalties), reaffirmed debt (where you recommit to the terms of a electric current loan), kid support or alimony. So, if those are your only debts, bankruptcy isn't the path for you lot.

What Are the Types of Bankruptcies?

Even though the full general goal of bankruptcy is to clear debt, not all bankruptcies are created equal. In fact, at that place are six unlike types of bankruptcies:

Affiliate vii: Liquidation
Chapter 13: Repayment Programme
Chapter eleven: Large Reorganization
Affiliate 12: Family Farmers
Chapter 15: Used in Strange Cases
Chapter 9: Municipalities

You may accept just taken one wait at this list and zoned out for second. That'due south okay. More than than probable, you would only be dealing with the 2 about common types of bankruptcies for individuals: Chapter seven and Chapter 13. (A affiliate but refers to the specific section of the U.S. Bankruptcy Code where the law is plant.²) But we'll take a look at each type so you're familiar with the options.

Chapter 7 Bankruptcy

Too known as liquidation or straight defalcation, Chapter seven is the virtually common type of bankruptcy for individuals. A court-appointed trustee oversees the liquidation (auction) of your assets (anything you own that has value) to pay off your creditors (the people you owe money to). Any remaining unsecured debt (like credit cards or medical bills) is typically erased. But as we mentioned before, this doesn't include the types of debt that aren't forgiven through bankruptcy, such equally educatee loans and taxes.

At present, depending on which state yous alive in, there are some things that the court won't strength you to sell. For case, most people are able to hold on to basic necessities like their house, car and retirement accounts during Chapter seven bankruptcy, simply zero is guaranteed. Chapter seven also can't stop a foreclosure—it can just postpone it. The only way to keep the stuff y'all even so owe coin on is to reaffirm the debt, which means you recommit to the loan agreement and go along making payments. Merely most Chapter seven bankruptcies are no-nugget cases, which means there'south no holding with enough value to sell.

You lot can just file for Chapter 7 defalcation if the court decides y'all don't make enough money to pay dorsum your debt. This decision is based on the means examination, which compares your income to the state average and looks at your finances to come across if you take the disposable income (aka the means) to pay back a decent amount of what yous owe to creditors. If your income is too low to do and then, so you may authorize for Chapter vii.

Proceed in heed that if you file for Chapter 7 bankruptcy, you will accept to attend a meeting of the creditors where people you lot owe money to can inquire you all kinds of questions about your debt and your finances. Yep, that's well-nigh as fun as it sounds. A Affiliate 7 bankruptcy too stays on your credit report for 10 years, and you won't be able to file for it again until subsequently viii years.

Chapter thirteen Bankruptcy

While Chapter 7 bankruptcy often forgives your debt, Chapter xiii bankruptcy basically reorganizes it. The courtroom approves a monthly payment plan and so yous can pay back a portion of your unsecured debt and all of your secured debt over a period of 3 to v years. The monthly payment amounts depend on your income and the amount of debt you accept. Just the court also gets to put y'all on a strict budget and check all your spending (ouch!).

Unlike Chapter 7, this kind of bankruptcy allows you to keep your avails and grab upwards on any debt that isn't bankruptable. Chapter 13 can also stop a foreclosure by giving you fourth dimension to bring your mortgage up to date.

Anyone can file for Chapter 13 bankruptcy as long as their unsecured debt is less than $419,275, and their secured debt is less than $i,257,850.³ Plus, yous have to exist upwards to date on whatever tax filings. Y'all should also know that a Chapter 13 bankruptcy stays on your credit report for vii years, and you can't file for it again until afterwards two years.

Chapter 11 Bankruptcy

For the most part, Chapter eleven bankruptcy is used to reorganize a business organization or corporation. Businesses come up up with a programme for how they'll continue operating the company while paying off their debt, and both the courtroom and the creditors must corroborate this program. Some individuals, such as real estate investors, who accept too much debt to qualify for Affiliate 13, just who as well have a lot of loftier-value backdrop and avails, may also choose to file under Chapter 11. But unless yous're a pro athlete or a glory, you're probably not going to mess with this one.

Chapter 12 Bankruptcy

This is a repayment plan that allows family unit farmers and fisherman to avoid having to sell all their stuff or foreclose on their property. While it's similar to Affiliate 13 bankruptcy, Chapter 12 is a footling more flexible and has higher debt limits.

Affiliate fifteen Bankruptcy

Affiliate fifteen deals with international bankruptcy issues and gives strange debtors access to U.S. bankruptcy courts.

Chapter 9 Defalcation

Chapter 9 bankruptcy is some other repayment program that allows towns, cities, school districts, etc. to reorganize and pay back what they owe.

For more than specific information nigh bankruptcy laws in your area, visit the Us Courts website.

Which Blazon of Defalcation Is Right for My State of affairs?

Since the other types of bankruptcies are specifically geared toward certain individuals or businesses, most people simply qualify for Affiliate 7 or Chapter 13. Hither's a side-by-side comparison to show how they're different:

What are the types of bankruptcies chart

The biggest difference betwixt Chapter 7 and Chapter 13 bankruptcy comes downward to the person's avails and income level. For instance, if someone had a recent job loss or an unsteady income, they might fall into a Affiliate 7 bankruptcy. But if the means exam says they make enough money to pay back their debts, they would fall into a Chapter 13 instead. Someone might too utilise for Chapter 13 if fugitive home foreclosure is a top priority, or they could go for Chapter 7 if timing is an issue—since it's significantly faster than Affiliate xiii.

But bankruptcy is a nervus-wracking experience, and choosing between Chapter 7 and Chapter 13 is like trying to choice the lesser of two evils. In both cases, privacy goes out the window. All your information literally gets laid out on a table for the court to look through. Then there'southward the fact that about half of Chapter thirteen defalcation cases nationwide are dismissed because the debtor tin't make the monthly payments.⁴

And while creditors are not legally able to hound you for money while y'all go through the bankruptcy procedure, the courtroom will come later you harder than any credit carte du jour visitor can if y'all miss a payment in Affiliate 13. But if your case is dismissed, and then creditors have the power to take their cutting directly from your paycheck and your home might go into foreclosure.

Defalcation may seem like a magic wand that can make all your problems disappear. Merely it's far from a magical feel—and it takes a huge emotional toll. Dave Ramsey filed for bankruptcy before he completely changed the way he handled money, and he never advises anyone to consider information technology. In fact, he says bankruptcy falls into the aforementioned category equally divorce—it should only be your final resort, later you've tried every other possible route first.

So, let'south expect at some ways you lot tin can avoid filing for bankruptcy altogether.

What Are Some Alternatives to Filing for Bankruptcy?

No thing how deep in debt you are, it is possible to avert bankruptcy. Y'all just need to know your options. Here are a few steps y'all can take that volition help become yous out of debt without filing for bankruptcy:

Have care of necessities get-go.

Earlier you practise anything, y'all want to make certain the Four Walls are covered: food, utilities, shelter, and transportation. Yous won't have the free energy to fight your way out of debt if you don't take a house to sleep in or food to eat. Then make sure you're taking care of yourself and your family unit first. The collectors can wait.

Get on a upkeep.

We mentioned before that in Affiliate 13 bankruptcy, the court puts y'all on a budget and tracks your spending. But the truth is, you tin do those things without filing for bankruptcy. If you're on your last leg, making a budget can exist a total game changer. By tracking where your coin is going—instead of wondering where it went—you'll find coin you didn't fifty-fifty realize you had. And yeah, budgeting as well means cutting all unnecessary expenses to pay off debt. The cable and the subscriptions have to go. No more than dining out. No more vacations. You're in survival fashion. But instead of the government telling you lot how to manage your money for five years in a defalcation case, y'all get to exist the i calling the shots.

Boost your income.

Your income is your most powerful wealth-edifice (and debt-fighting) tool. The more coin you make, the more you tin can throw at your debt. So, you lot may demand to pick up a second task or work more hours at your current job to help keep you afloat while you catch up on those monthly payments. Yes, it tin be exhausting, but your temporary cede will be worth it in the long run.

Sell your stuff.

Remember how we said the court liquidates your assets in Chapter 7 bankruptcy? What if you sold your stuff instead? If you've got annihilation of value, similar boats, fancy lawn mowers, or anything with a motor that you don't use to bulldoze to work, sell it! Furniture, collectibles, jewelry, that guitar you promised to learn to play someday—anything you lot don't need has got to go. Audio farthermost? This is basically what could happen if you file for defalcation—except yous wouldn't have command over how your things get sold. And then hit up Craigslist, eBay and Facebook Marketplace and turn your stuff into fast cash.

Get on a program!

Did y'all know that virtually bankruptcy courts require you lot to go through a financial literacy course before your debt can be forgiven? That's because debt has go a cycle of life for so many. Simply information technology doesn't take to exist that style!Financial Peace Academy (FPU) will teach you lot how to kick toxic coin habits, save and pay off debt like a champ, and build a nifty future for yous and your family unit. Plus, it's cheaper than the bankruptcy court fee. This proven plan has helped almost 10 one thousand thousand people modify their lives. Get started today with a free trial of Ramsey+ and say skillful-cheerio to debt for good!

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