How Many Times Can You File Bankruptcy?
There are no limits on how many times you can file bankruptcy. However, there are wait times between when you can file another Chapter 7 or Chapter 13 personal bankruptcy. Further, filing bankruptcy multiple times may have consequences on your credit.
Understanding Differences in Types of Bankruptcy
It’s important to know there are different types of bankruptcy, and various rules apply to each type. This blog will focus on Chapter 7 and Chapter 13, which are the primary types of bankruptcy sought by individuals in the United States. Other types of bankruptcies, such as Chapters 9, 11, 12, and 15, have specialized rules for businesses, family farmers, and others.
Is There a Limit on Filing Bankruptcy?
There is no limit on how many times you can file bankruptcy, but there are time limits on how often you can file. Determining how often you can file bankruptcy can be complex and depends on when you last filed as well as the type you filed previously.
How Often Can You File for Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is also called “liquidation bankruptcy.” It involves selling or “liquidating” assets to pay creditors. This is usually the fastest type of bankruptcy and gives you a blank slate, with most debt being completely eliminated when it is discharged.
If you previously filed a Chapter 7 bankruptcy, then you must wait at least eight years from when the previous bankruptcy was filed to file a new Chapter 7. It’s important to know that the time clock begins when you filed your Chapter 7, not when the debt was discharged.
If you previously filed a Chapter 13 bankruptcy, and all the creditors’ claims were paid in the previous case, then there is no waiting period for filing a new Chapter 7. That means, if your Chapter 13 is finalized, you can immediately file Chapter 7 if you need to.
There are other exceptions as well. For example, if you filed a Chapter 13 and you’ve paid 70% of the creditors’ claims in “good faith” by making your “best effort,” then you can file Chapter 7 bankruptcy. However, if you did not complete at least 70% repayment, then you must wait at least six years to file a Chapter 7 after a previous Chapter 13.
How Often Can You File for Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is also called “reorganization bankruptcy.” It allows you to consolidate payments of debt under a three- to five-year payment plan that is court approved. This option is best for people who have enough income to pay their debts, but they need some help with time considerations or with minimizing interest rates.
If you previously filed a Chapter 7 bankruptcy, you must wait four years after the filing of the Chapter 7 to file a new Chapter 13. If you previously filed a Chapter 13 bankruptcy, then you must wait two years from when the previous case was filed.
Do I Have to Wait to File Again If My Bankruptcy was Dismissed?
No. If you originally filed bankruptcy, but the case was dismissed and no debt was discharged, you do not have to wait to refile your bankruptcy case. You can file Chapter 7 or Chapter 13 at any time after a bankruptcy case dismissal.
What Is Double Filing (Chapter 20)?
You can file a Chapter 13 case right after a Chapter 7 case has finished. This is called “double filing” or “Chapter 20.” While there is not actually a Chapter 20, the combination of Chapter 7 and Chapter 13 (7+13=20) is referred to as Chapter 20 in the bankruptcy industry.
This tactic may allow you to wipe out more debts than if you used one type of bankruptcy at a time. For example, Chapter 7 allows you to eliminate unsecured debt, including credit card debt and medical bills. Then, Chapter 13 will allow you to set up a payment plan for the rest of your debt. This also gives you more time to catch up on past due debt.
It’s important to know that even if you file both a Chapter 7 and Chapter 13, you may not be able to get rid of all debt, such as student loans and tax debts. Further, you need to prove you’re acting in good faith and not trying to manipulate the system.
Work With a Bankruptcy Attorney for Trusted Guidance
The bankruptcy lawyers at Clark & Washington have extensive experience guiding clients through the bankruptcy process. There are many issues to consider when deciding if bankruptcy is right for you. You need the trusted advice of a legal advisor.
Call us today to schedule a case review about your specific situation.