Michigan Laws on Re-filing for Bankruptcy

We get many calls from prospective clients confused about the options and restrictions of re-filing for bankruptcy following the discharge or dismissal of a prior case. Can I re-file a bankruptcy after my bankruptcy was dismissed? Is there a certain period of time that I have to wait before I can file again? Will I be penalized for re-filing? What has changed since I last filed? It can be complicated and unfortunately we have found that some attorneys are actually misinformed themselves about what the rules are for re-filing a Chapter 7 or Chapter 13 bankruptcy.

Here is a breakdown:

Chapter 13 Bankruptcy:

For the most part, you can file a Chapter 13 at any time... even the day after a discharge from a Chapter 7 if you need it. Chapter 13 protection, simply stated, is a court-authorized repayment plan for your debt. As such, the only limiting factor following a dismissal or discharge from another case is that the new case be a good faith effort to reorganize your debt, not an attempt to delay or evade your creditors. The program allows you to consolidate and reduce your debts, enjoy the security of court protection from your creditors and creditor actions (home foreclosure, wage garnishments, car repossession, etc) and the opportunity to rebuild your credit over the course of the 36 - 60 month repayment plan.

Why would someone need to refile for Chapter 13?

Sometimes a previous case is dismissed due to chronically missed payments, failure to attend a court appearance or failure to file or provide documentation to the Trustee or Court. For the most part, the court provides leniency if you miss one or a couple of payments or cannot make a necessary court appearance due to a good cause. Typically a case is dismissed when payments are consistently missed or an affidavit is not filed explaining why a necessary hearing was missed. If you are facing a dismissal of your case, your attorney should be there to support you in this process. For instance our firm tracks payment history with annual client reviews and sends letters to our clients to advise them if their payment history needs to be addressed. We also place reminder calls to our clients for court appearances and we draft and file affidavits if a hearing is missed for a good cause.
If your case is dismissed you have the right to re-file a bankruptcy to regain the protections you lost with the dismissal and reinstate your ability to reorganize your debt. If you re-file within one year, your attorney is required to file a motion petitioning the court to extend your court protection (the "automatic stay" protection) from creditors (foreclosure, etc.) beyond a 30 day period. The purpose of this motion is to demonstrate that your present case is filed in good faith. Motions that are timely filed and supported by an affidavit by the debtor explaining the circumstances and why the new case presents a better opportunity to succeed. Again, following the dismissal of a case if you are facing the need to re-file a Chapter 13 finding an experienced law firm that specializes in bankruptcy is essential.
Perhaps a client completed a Chapter 13 or Chapter 7 program (discharged) but later needs to re-file due to unexpected or changed circumstances - temporary loss of income, under-employment, lawsuit, etc. Or, the prior case did not or could not address all of the individual’s debts (e.g., non-dischargeable income tax liabilities, secured debts remain delinquent following a Chapter 7, second mortgage remains following Chapter 7). Many times and for many reasons you may still have debt that needs to be resolved following the completion of a bankruptcy and re-filing a subsequent bankruptcy is many times a viable option to finish your debt resolution efforts. Following a successful, discharged case, you can immediately re-file, no separate motion is necessary, and the protections of the bankruptcy are immediately in place. The only consideration when re-filing after a successful case is whether a client can’t obtain a discharge in the subsequently filed case. A case can still benefit a client even when a discharge is not available. The specifics of when a client will be available for a discharge and the circumstances where a client can benefit even without obtaining a discharge should be discussed with an experienced bankruptcy attorney. The nuances of this area are often misunderstood by inexperienced or ill-informed professionals.

There are certain circumstances that can bar a re-filing when a debtor voluntarily dismisses his or her prior case. Further, a bankruptcy judge can enter an order barring the re-filing of a case if the judge determines that the filer was abusing the system to hinder or delay creditors versus using it as a tool to reorganize their debts. These orders are rare but a client's eligibility to re-file will always be confirmed when meeting with our attorneys.

Chapter 7 Bankruptcy:

You are allowed to file a Chapter 7 every eight years. The clock is reset from the time your case is filed, not discharged. The court does not require you to narrate or explain your reasons for needing to re-file. If you did not receive a discharge (i.e., case was dismissed) after filing a Chapter 7, you may be eligible to re-filing a subsequent Chapter 7 and obtain a discharge, depending on the circumstances surrounding your prior dismissal.

If you filed a Chapter 7 and obtained a discharge, but fell into subsequent financial hardship within those eight years, you can file a Chapter 13 at any time. This would provide you with legal protection from your creditors (collections, home foreclosure, vehicle repossession, etc), court-approved repayment plan, opportunity to remove a second mortgage on your home and the chance to improve your credit throughout the repayment process. If you file the Chapter 13 at least four years after the Chapter 7 filing, you can eliminate a portion if not the majority of your unsecured debt obligations (credit cards, medical bills, etc) as well as your second mortgage and received a court discharge from those debts. If you did not reaffirm your second mortgage when you filed your Chapter 7, you may be able to remove the second mortgage from the property with the use of a Chapter 13 whether it has been 4 years since the Chapter 7 or not.

As you can see, there are many reasons why re-filing a bankruptcy may be necessary and beneficial. Further, there are several variables and nuances that dictate when and what protections can be filed by a re-filed bankruptcy. Contacting an experienced bankruptcy attorney should be your first step in the process. We offer free same-day bankruptcy evaluations. Please call us toll free at 866-261-8282 or click here to schedule a consultation right now.

We offer free in-office or phone consultations to review your personal circumstances, analyze your situation and advise you on the best course of action. We specialize in bankruptcy law, debt resolution, foreclosure prevention and credit repair. We have offices in Southfield, Dearborn, Flint, Ann Arbor and Warren, Michigan. Please call us toll free at 866-261-8282 or click here to schedule a consultation right now.