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13 Sep 2012

Multiple Bankruptcies Can Have Benefits

Toni Braxton has won six Grammy Awards - and filed for two bankruptcies.

Our Colorado Springs Chapter 7 Bankruptcy attorneys understand that she intends to talk about her financial journey in an upcoming music television show.

While some may view multiple filings as a sign of irresponsibility, the fact is that there are some situations in which the filer may have little choice. It's also worth noting that someone who has already been through the bankruptcy process knows that when circumstances outside their control begin to snowball, there is no sense in wasting precious time and money in an effort to save a credit score that is likely to suffer regardless.

In Braxton's case, the first bankruptcy stemmed from a recording deal that was beyond deplorable. In fact, her late-1990s hit son, "Unbreak My Heart" reportedly earned her a total of less than $3,000.

Then two years ago, Braxton filed again after a medical ailment impeded her ability to perform Las Vegas shows she was contracted to perform. Promoters and venues lost a great deal of money, and sued Braxton. After unsuccessfully attempting to settle with them, she sought another Chapter 7 filing.

The Bankruptcy Abuse and Consumer Protection Act of 2005 changes the wait times in between bankruptcy for certain debtors. But it's not true that you have to wait eight years across the board before you can file a new bankruptcy. Essentially it works like this:

  • If you previously filed a Chapter 7 case, you have to wait at least 8 years before filing a new Chapter 7 case.
  • If you previously filed a Chapter 7 case, you have to wait at least 4 years before filing a new Chapter 13 case.
  • If you previously filed a Chapter 13 case, you have to wait 6 years before you file for a new Chapter 7 case, unless your previous plan has been 100 percent paid or you have paid off 70 percent with good faith and best effort requirements.
  • If you previously filed for a Chapter 13 case, you have to wait at least 2  years before filing for a new Chapter 13 case.

If none of your debts were actually discharged in the previous filing - that is, you merely filed for the protection of the automatic stay - than these time limits won't apply to you.

Stephen H. Swift

Managing Attorney
Law Office of Stephen H. Swift, P.C.

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