How Often Can You File for Bankruptcy?

The bankruptcy process exists to help people who find themselves in severe financial trouble. It is a tool that gives debtors a fresh start after accumulating debts they cannot pay. The Bankruptcy Courts are aware that some individuals and corporate entities try to abuse the system, which is why filing limitations exist.

This article explains these restrictions and discusses the wait times involved before refiling for either a Chapter 7 or a Chapter 13 bankruptcy.

The Different Types of Bankruptcies

The U.S. Bankruptcy Code governs all types of bankruptcies and imposes time limits for how quickly a debtor can file for another bankruptcy.

According to the Bankruptcy Code, there are six types of bankruptcy available:

• Chapter 7: This is a personal bankruptcy, in which the Bankruptcy Court discharges the filer’s unsecured debt and the trustee makes arrangements to pay off secured debt (businesses can but rarely choose to file for Chapter 7)
• Chapter 9: Struggling schools, municipalities, and cities can file a Chapter 9 bankruptcy to eliminate debt
• Chapter 11: This is the equivalent of a Chapter 7 for partnerships and corporations
• Chapter 12: This chapter is only available to family farmers and fishing companies
• Chapter 13: This is only available to people with a reliable source of income and is often referred to as the”wage earner’s bankruptcy.”The bankruptcy trustee reorganizes the filer’s debts and devises a repayment plan so that all creditors receive a portion of their debt. The Chapter 13 bankruptcy repayment plan lasts three to five years.
• Chapter 15​: This type of bankruptcy is available to U.S. and foreign courts

As they are the most commonly used types, this article will focus on Chapter 7 and Chapter 13 bankruptcies.

The U.S. Bankruptcy Code and Filing Limitations

The U.S. Bankruptcy Code determines the time limits based on which Chapter you file. The clock starts on the day you filed your previous bankruptcy case, not the date of the bankruptcy discharge or bankruptcy stay.

Under the U.S. Bankruptcy laws, the filing time limits, or waiting periods, only apply to completed bankruptcies. The wait time between bankruptcy filings based on the type of bankruptcy filed are shown below.

The above waiting periods help prevent people from abusing the bankruptcy system and leaving high credit card debt unpaid. Between filings, you must try to pay off any accounts from a previous bankruptcy.

Why File a Different Chapter the Second Time Around?

Some people decide to file Chapter 13 after filing a Chapter 7 bankruptcy, or vice versa after completing their Chapter 13 repayment plan. It begs the question of why someone would file a chapter different from their previous one.

The type of bankruptcy you file will change your repayment plan, the amount of unsecured debts you owe, and the amount of time the bankruptcy stays on your credit report. Filing for a different type of bankruptcy may make more sense than the one you used in your previous bankruptcy case, as every situation is different.

An experienced bankruptcy attorney or credit counseling office can help you understand the best debt relief options. Your attorney can’t erase the time limits between filing dates, but they can help you decide if switching chapters is a good idea. They can also help you prepare to file when the date is available.

You can apply one of these strategies to your second bankruptcy filing:

• Switching from Chapter 7 to Chapter 13​: If you pay off unsecured debts through a Chapter 7 bankruptcy case, you can file a Chapter 13 bankruptcy case. This allows a repayment plan to pay off tax debt or other debts the trustee did not discharge in your Chapter 7 case.
• Switching from Chapter 13 to Chapter 7​: If you pay back 100% of your unsecured debts, the bankruptcy court may waive the six-year waiting period. It’s also possible that the court will only require that you pay back 70% of your unsecured debt. The trustee must also determine that you filed your first bankruptcy case in good faith to qualify for Chapter 7.
• Repeating a Chapter 13 bankruptcy filing: Some people repeat a Chapter 13 filing to help manage outstanding student loans or tax debts. The court won’t discharge these debts, which means that eventually you’ll have to pay them in full.

“Chapter 20 Bankruptcy”: Filing Another Bankruptcy Before the Time Limit Is Up

The above time limits refer to how long a debtor must wait to include a debt in another bankruptcy. If you aren’t looking to discharge debt but want a repayment plan with protections, filing a Chapter 13 bankruptcy immediately after your Chapter 7 discharge date might be an option.

The courts refer to filing for Chapter 7 and Chapter 13 in succession as a”Chapter 20 bankruptcy.”The process of filing for Chapter 13 immediately after a Chapter 7 discharge is complicated, and many courts do not allow it. If you intend to do this, consult with a skilled bankruptcy lawyer before filing your petition.

Pros and Cons of a Double Filing

Filing for bankruptcy is not something you should take lightly. Most people don’t file for bankruptcy unless their finances are in such dire straits that their mortgage is in foreclosure or the bank is threatening to repossess their car. Filing multiple bankruptcies within a few years of each other will not be kind to your credit rating.

While filing for bankruptcy may be a last resort, it is a helpful tool for many debtors. Not surprisingly, there are pros and cons to filing for bankruptcy multiple times.

Some of the pros of a double filing include:

• You will have more time to repay debts that aren’t dischargeable, such as child or spousal support
• You can include debt that you have accumulated since your first case
• You may have forgotten to include certain debts the first time around
• You may be unable to pay debts you reaffirmed in the first bankruptcy case

There are also serious cons associated with a double filing to consider:

• The trustee may not allow your second bankruptcy filing, and you will have wasted time and money
• If a judge finds that you have filed the second case in bad faith, they will stop your automatic stay and allow creditors to resume debt collection
• You will have multiple bankruptcy cases appear on your credit report
• Banks do not want to lend money to borrowers with multiple bankruptcies on their credit history
• Your credit score will decrease by a significant amount
• You will have to pay higher interest rates for any loans or credit cards you secure post-bankruptcy

If you are considering refiling, you should retain a bankruptcy lawyer. There are many nuances to filing multiple bankruptcy cases, and there are severe consequences for filing in bad faith.

Disclaimer: Bankruptcy and banking laws change frequently due to new legislation, higher court rulings, and other means. While FindLaw strives to provide readers with the most current information, we recommend you consult a local bankruptcy lawyer to confirm the current laws.

Filing for Bankruptcy a Second Time? Get a Free Consultation

Filing for bankruptcy can be complicated and should be a last resort. Before you file your petition, you should at least meet with a debt settlement company or credit counseling service to attempt to secure a reasonable payment plan with your creditors.

Getting a fresh start is never easy. The good news is that there are ways to rebuild your credit, pursue a second discharge, or work towards a better financial situation. An experienced bankruptcy or credit repair attorney can help.

Related FindLaw Resources

• Avoiding Debt
• Dealing With Creditors Informally
• Reasons To File for Chapter 7 Instead of Chapter 13