How Many Times Can Someone File for Bankruptcy?
In theory, there are no limits on the number of times you can file for personal bankruptcy, but the US Bankruptcy Code imposes some mandatory minimum time periods between bankruptcy filings if:
- You ever received a discharge of debts in a bankruptcy case or
- Your bankruptcy case was dismissed with prejudice.
If you commence a new case before the required waiting period elapses, you won’t be eligible for a discharge in the new case.
Types of Personal Bankruptcy
A Chapter 7 bankruptcy is a “liquidation bankruptcy” used by debtors who lack the income to make regular payments toward their debts. The non-exempt assets (property that cannot be protected) of a Chapter 7 debtor are sometimes sold to his creditors and most debts are discharged.
In contrast, a Chapter 13 bankruptcy is a “reorganization bankruptcy” in which the debtor proposes a 3-5 year payment plan to repay at least a portion of his debts. Most unsecured debts remaining at the completion of the repayment plan are discharged.
As a general rule, the period between cases is measured from the initial filing date to the initial filing date.
Chapter 13 to Chapter 7
If you had debts discharged in a Chapter 13 bankruptcy but later decide to file under Chapter 7, the mandatory waiting period is six years from the filing date of the first case. There are, however, two exceptions to the 6-year waiting period that permit you to file the Chapter 7 case sooner:
- If you paid all of your unsecured creditors in full in the Chapter 13 case, or
- If you paid at least 70% of the claims in Chapter 13 and the plan was proposed in good faith and was your best effort.
Even without the exceptions, because of the 3-5 year payment plan structure of Chapter 13, you may be able file a Chapter 7 soon after your Chapter 13 discharge if you completed a 5-year plan.
Chapter 13 to Chapter 13
If you had debts discharged in a Chapter 13 bankruptcy, you cannot file a new Chapter 13 case for a period of two years from the filing date of the first case. Because a Chapter 13 discharge requires completion of a 3-5 year payment plan, this rule means that you can commence a second Chapter 13 case immediately after the discharge in your first case.
But keep in mind that if the court doesn’t approve the Chapter 13 plan in your second case, you won’t be able to convert to a Chapter 7 bankruptcy and receive a discharge unless there’s been the required six-year gap between your 2 cases.
Chapter 7 to Chapter 7
If you had debts discharged in a Chapter 7 liquidation you aren’t eligible for a discharge in a subsequent Chapter 7 case unless that case is commenced eight years or more from the filing date of the first case.
Chapter 7 to Chapter 13
If your first discharge was under Chapter 7, your subsequent Chapter 13 case isn’t eligible for a discharge unless it is commenced at least four years from the filing date of the first case.
But if the court doesn’t approve the Chapter 13 plan in your second case, you won’t be able to convert to a Chapter 7 bankruptcy and receive a discharge unless there’s been the required eight-year gap between your 2 cases.
Filing 2nd Case Even If You’re Not Entitled to Discharge
There are times when it may help you to file for bankruptcy, even if you are not eligible to receive a discharge. For example, if you are behind in your mortgage or tax payments and file bankruptcy, you are immediately protected by the automatic stay. You can then take the time of the bankruptcy case to get caught up on your payments. The stay applies to everyone who files bankruptcy, even if they are not able to get a discharge.
Dismissal With Prejudice
Unless the court rules otherwise, a dismissal of a bankruptcy case with prejudice usually means that you can’t file again for a period of 180 days.
The rules that apply to successive bankruptcy cases are complicated and the details of your particular situation matter. The experienced bankruptcy lawyers at Martin Attorneys, PA can give you the advice you need to make a decision about dealing with your debts.
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