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Legal Briefings: Prior bankruptcy, still drowning in debt

This article first appeared on St. George News under the Snow Jensen & Reece column “Legal Briefings.”

Matthew Ence is an attorney with the law firm of Snow, Jensen & Reece. The content in this column should not be construed as legal advice or as a substitute for counsel on individual matters, in most scenarios it is premised upon Utah law and may not be relevant to issues arising in other states. 

Question: I’m drowning in medical bills but I filed for a Chapter 7 bankruptcy almost eight years ago. Can I file again? Are there any things that could prevent me from filing bankruptcy?

Answer: You cannot file a new Chapter 7 bankruptcy if you obtained a discharge of your debts in Chapter 7, within the last eight years, or in Chapter 13 in the last six years.

Typically you also cannot file if a previous bankruptcy was dismissed (without a discharge) within the last 180 days.

Assuming none of these restrictions is applicable to you, in order to be able to file Chapter 7 you must also pass a “means test.”  In other words, your income cannot be greater than a certain amount.  The purpose of the “means test” is to determine whether you have enough disposable income, minus certain expenses, to service your unsecured debts over a five-year period.  If your income is less than this amount, you are eligible for? Chapter 7 bankruptcy.  If your income is greater than this amount, then Chapter 13 bankruptcy is likely your only option.

Other issues can derail a bankruptcy filing.  For example, if the bankruptcy court determines that you have defrauded your creditors or tried to hide assets, the court will dismiss your case.

The bankruptcy rules and procedures can be complex.  As in all cases, we would encourage you to seek out competent legal counsel to help you navigate the bankruptcy minefield.

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