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Chapter 7 bankruptcy and a second discharge in Texas

Texan residents who receive a discharge in bankruptcy as a form of debt relief are not immune to again experiencing financial problems in the future. Simply because there was a successful filing of a Chapter 7, Chapter 11 or Chapter 13 bankruptcy, it will not automatically mean that the person will be safe forever. Circumstances can arise in which the person will need to file for Chapter 7 bankruptcy again. A question that comes up for these individuals is whether they are able to receive a second discharge in a later case. Knowing how this works and the rules that the courts have put into place is an imperative before moving forward.

If a debtor was granted a discharge under Chapter 7 or Chapter 13 in a case that was filed within eight years prior to the new Chapter 7 filing, the court will deny a discharge. The court will deny a Chapter 7 discharge if the debtor had received a discharge in a Chapter 12 or Chapter 13 bankruptcy within six years of the new case, unless there are certain factors in place.

These factors are: if the debtor paid in full all claims that were allowed unsecured in the previous case; and the debtor made the payments under the plan in the previous case and the amount came to 70 percent of the allowed unsecured amount with the plan having been proposed in good faith with the payments made being within the best efforts of the debtor. There cannot be a discharge if there was a previous discharge under Chapter 7, Chapter 11 or Chapter 12 if it was filed four years prior to the new case or, if it was a Chapter 13 case, it was filed two years before the new case.

Bankruptcy is a strategy for those who are in debt and can no longer continue on the cycle of financial struggles. There are numerous options to get out of debt. When a person who has filed for bankruptcy in the past and received a discharge again needs to consider filing for bankruptcy due to financial challenges, knowing the law for a second discharge in a later case is important.

Source: uscourts.gov, "Discharge in Bankruptcy -- Bankruptcy Basics -- Can a debtor receive a second discharge in a later Chapter 7 case?," accessed on Feb. 7, 2017

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