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Court bars future discharges after repeat bankruptcy filings

Tennessee residents may file for bankruptcy more than once in their lifetime. However, a bankruptcy court can choose to bar a future discharge of debts in some cases. It is rare for a bankruptcy court to restrict future discharges, but a court will do so if a debtor is found to be misusing the bankruptcy system.

The U.S. Bankruptcy Court for the District of Kansas disallowed a future discharge of debt for a woman who had filed for bankruptcy five times in 14 years. While the woman was in her fifth bankruptcy case, a Chapter 13 filing, she received a $25,000 employment law settlement. The woman spent the money without the court's approval, and her bankruptcy trustee objected. After the objection, the woman filed a motion to dismiss her bankruptcy case.

While the bankruptcy court could not prevent the woman from dismissing her bankruptcy case, the court did take action to prevent a future discharge. Part of the reason the court invoked the future discharge bar was that the woman was planning to file for Chapter 13 bankruptcy again. The court also found that the woman had misappropriated the settlement money that she received.

Most people who file for bankruptcy are not planning to do so again in the future. The bankruptcy process may help them to get a fresh financial start so that they can start rebuilding their savings and reestablishing good credit history. An attorney can often help clients to determine whether filing for bankruptcy is a good solution to their financial problems.

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