If you expect to fly through your second Chapter 7 unscathed, think again. Bankruptcy trustees often scrutinize second-time filers more than do first-time filers. Although federal bankruptcy court doesn't place limitations on how many times you can file Chapter 7, it does limit how many times you can actually receive a discharge of your debt. Currently, you can only discharge your bad debt if it's been over eight years since your last filing. Once you're allowed to file Chapter 7 again to discharge your new debt, you'll need to discuss your finances with the trustee when you attend the meeting of the creditors. Knowing what to expect during the meeting may help you get through it.
Answering Questions About Your Means Test
Before bankruptcy court placed limitations on when consumers can file for debt relief, a number of filers abused the system. These consumers filed multiple Chapter 7 cases within a few years of each other. In 2005, bankruptcy court enacted the Bankruptcy Abuse Prevention and Consumer Protection Act to deter repeat filers from abusing the system. One of the things the act created is the means test.
The means test asks you many questions about your finances and debt. Based on your answers to these questions, the means test determines if you can file Chapter 7, or if you can repay your debt through a restructured payment plan.
Your trustee will go over the means test thoroughly to ensure that you didn't leave out information. He or she may ask you questions in order to compare your responses to the answers on the test. It's a good idea to memorize the answers and information you placed on the means test to avoid discrepancies in your responses.
Giving Reasons for Filing Bankruptcy a Second Time
One of the questions you should expect to hear from your trustee is why you need to file for Chapter 7 again. The trustee needs to know if you're abusing the bankruptcy system, or if you really need relief from your debt.
Although there are many reasons to file bankruptcy a second time, the loss of employment and excessive medical bills are two of the most common reasons consumers file again. These financial situations can create problems with your ability to your pay rent, utility bills and car payments, which add to your bad debt over time.
If you experience one of the problems above, your bankruptcy trustee may be more inclined to go easy on you during the meeting of the creditors. However, to back up your claim of unemployment or high medical bills:
- Bring copies of your proof to the meeting
- Request that your bankruptcy trustee place the proof inside your bankruptcy file for the discharge judge to see when he or she looks at your case
- Ask the trustee if there are other types of proof you can attach to your file to back up your claim
Keep in mind that the court gives your bankruptcy trustee power to investigate your financial situation by checking your credit reports and bank accounts. If you have bad credit card debt or delinquent store credit debt, reveal this during the meeting. The trustee will ask you about them. In some cases, the creditors that hold your delinquent accounts may show up to the meeting.
If you feel uncertain about filing Chapter 7 bankruptcy for a second time, or if you don't think that you can attend the creditor's meeting alone, contact a bankruptcy attorney for help. An attorney may offer tips on what to say or do during the meeting. Getting through your second bankruptcy isn't easy but with the right information and representation, you can.