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Debtors may need to wait before filing for bankruptcy

A person who files for Chapter 7 bankruptcy will need to liquidate all nonexempt assets and use the money raised to pay creditors. Typically, a liquidation bankruptcy case in California is completed in about four to six months. Those who wish to file a Chapter 7 case may need to pass a means test, which compares their income to the median in the state. In some cases, individuals will need to wait to file their cases.

A person who wants to file a new Chapter 7 case must wait at least eight years from the date of a previous filing. Individuals who have filed for Chapter 13 bankruptcy in the past must wait six years from the date a case is discharged to file for Chapter 7 protection. Upon seeking Chapter 7 protection, a debtor must wait four years before it can be converted in a Chapter 13 case.

This type of conversion is typically referred to as Chapter 20 bankruptcy. It is possible to switch from a Chapter 13 proceeding to a Chapter 7 proceeding if a debtor qualifies to do so. If a case is dismissed, an individual may be barred from filing for bankruptcy at all for at least 180 days. However, the ban may extend indefinitely depending on the circumstances in a given case.

Filing for bankruptcy may allow an individual to overcome financial problems. In some cases, debts may be discharged without debtors losing any property. An attorney may explain the process of filing for bankruptcy as well as what assets may be exempt from liquidation. It is not uncommon for equity in a home, clothing or money in a retirement account to remain off limits to creditors. Furthermore, creditors may be barred from contacting debtors while a case is pending.

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