August 17, 2022

How Often Can You File For Bankruptcy?

There are many types of bankruptcy. The rules regarding how often you can file bankruptcy are also different. Depending on the type, the waiting period for another bankruptcy case can be anywhere from two to eight years. There may not be a waiting period in certain situations.

This guide will focus on Chapter 7 bankruptcy and Chapter 13 bankruptcy. These are the most common types of bankruptcy for individuals. Other types of bankruptcy -Chapter 9, 11, and 12–focus on families, fishermen, municipalities, and filings that involve more than one country. It can be difficult to find information about when you can file bankruptcy. This guide will help you determine if you are eligible to file for bankruptcy again.

How Many Times Can You File For Bankruptcy

Depending on the type, you may file bankruptcy multiple times. The waiting periods for Chapter 7 bankruptcy and Chapter 13 bankruptcy, two types most common for individuals, differ. You can find more information on these chapters below.

Waiting periods are only applicable if your previous bankruptcy case was successful. A bankruptcy discharge removes you from any responsibility for any debts that were included in bankruptcy cases. If your case was dismissed but your debts are not discharged, you don’t need to wait to file. You can file for bankruptcy at any time, provided that none of the following happened in the last 180 days.

  • Your case was dismissed because you disobeyed court orders.
  • Your case was dismissed because you failed to appear in court.
  • The case was dismissed by you at your own initiative.

How Many Times Can You File Chapter 7?

Chapter 7, also known as liquidation bankruptcy, is the process of liquidating assets and selling them to creditors.

You must wait eight years to file a Chapter 7 bankruptcy case if your bankruptcy case was Chapter 7/Chapter 11 and you wish to file another Chapter 7 bankruptcy case. However, individuals can file to reorganize finances under chapter 11. This is often a bankruptcy option for businesses.

If your bankruptcy case was Chapter 13 or you wish to file a Chapter 7 case, the guidelines can be more complex.

  • Chapter 7 is not subject to a waiting period if all creditors’ claims have been paid in Chapter 13.
  • Chapter 7 is not subject to a waiting period if 70% of creditors’ claims have been paid in Chapter 13. If the Chapter 13 repayment plan represented the filer’s “best effort”, you will need to use at least all of your income (income after expenses and mandatory payments) for creditors.
  • If less than 70% and up to 100% of the claims are not paid in the Chapter 13 case, Chapter 7 will be subject to a six-year waiting period.

How Many Times Can You File Chapter 13?

Chapter 13, also known as a wage earner’s plan, allows a debtor to pay part or all of their debts through a court-approved plan that lasts three to five years.

You must wait at most four years if your Chapter 7 bankruptcy case was filed before you can file for Chapter 13 bankruptcy. If your bankruptcy case was Chapter 13 but you wish to file another Chapter 13 bankruptcy case, the waiting period drops to two years from the date the bankruptcy case was filed.

How Many Times Can You File For Bankruptcy?

There is no limit on how many times you may file Chapter 7 bankruptcy cases.

Although you may file for bankruptcy multiple times, it is possible to prolong credit damage. A Chapter 7 bankruptcy will remain on your credit reports for 10 years, while a Chapter 13 bankruptcy will stay on your credit reports for seven years.

Double Filing (Chapter 20 Bankruptcy).

Informally, Chapter 20 bankruptcy is double filing. This refers to the filing of a Chapter 13 case after a Chapter 7 case has ended. Chapter 20 is not part of the U.S. Bankruptcy Code. It’s actually slang for double-filing (7 + 13 = 20). There are pros and cons to filing a Chapter 13 case following a Chapter 7 case.

Pros

Chapter 20 has the advantage that you may be able to eliminate more debts over time than if you only pursued Chapter 7 and Chapter 13.

Chapter 7 bankruptcy can be used to eliminate unsecured debts such as medical bills and credit card bills. You can also file Chapter 13 to set up a three or five-year repayment plan for at most some of your secured or unsecured debts.

You may be able to reduce your debt by filing Chapter 7 first. This will allow you to lower your debt and keep it below Chapter 13’s debt limit. You may also be able to file Chapter 13 after you have completed a Chapter 7 case. This will allow you to reduce your debt and bring it below Chapter 13’s limit.

Here are some benefits of double filing.

  • This could allow you to pay off more debts in the future.
  • You may be able to reduce your debt under Chapter 7 first to qualify for Chapter 13.
  • This gives you more time for past-due debts to be paid.

Cons

These are some of the drawbacks to double filing.

  • However, you won’t be allowed to pay off certain debts such as child support and alimony.
  • To receive a full discharge of Chapter 7 debts, you must wait for Chapter 13 to be filed.
  • After Chapter 7, you will need to show the court that your actions were in good faith.
  • Both types of bankruptcy can slow down your efforts to improve your financial situation.

Strategy To Use In A Second File

It is important to create a plan if you are thinking of filing for bankruptcy again. These are the five steps you should consider:

  1. Consider whether you have an option to file bankruptcy again, which will help reduce your debt burden. Before you file for bankruptcy again, consider all your options for debt relief.
  2. If there are no other options, figure out which type of bankruptcy you should file.
  3. Consider the implications of a second bankruptcy. Do you want to see how it affects your credit score or whether your assets will be lost?
  4. Calculate the time period between the bankruptcy you have filed the first and the bankruptcy you wish to file the second.
  5. You can choose to file your second bankruptcy on the spot or hire an attorney.

Your Credit Report And Multiple Filings

You can have at least two bankruptcies on your credit report. They will appear for many years. You might see both of them on your credit reports. A Chapter 7 case may remain on your credit file for as long as 10 years. A Chapter 13 case, however, can be kept on your credit for up 7 years.

These are some possible credit consequences of multiple bankruptcy filings

  • Loss of an “automatic Stay” It can lead to the loss of what is known as an “automatic stay.” An automatic stay stops certain creditors from trying to collect debts from bankruptcy filers.
  • A lower credit score. This will maintain your credit score low as long as there is either bankruptcy or both.
  • It is difficult to qualify for credit. It will likely make it more difficult to qualify for the credit, such as a mortgage or credit cards.
  • There are other issues. This could cause problems when you attempt to rent an apartment, find a job, or purchase insurance.

Bottom line

Although you can file bankruptcy multiple times, there is usually a waiting period between filings. The type of bankruptcy filed before and the plan you are filing next will determine how long you have to wait.

This post was written by Trey Wright, a Jacksonville chapter 11 lawyer with extensive experience! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.

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