Filing for bankruptcy is supposed to give you a fresh start. Unfortunately, things don’t always work out according to plan. So, what happens when you face new financial challenges after your final discharge? Do you file for another bankruptcy?
If you are in such a situation, know that you are not alone. Research shows that at least eight percent of individuals who file for bankruptcy end up filing for second bankruptcy. In fact, the 2005 changes to the Bankruptcy Code that were intended to reduce bankruptcy filings in the country have not significantly impacted the number.
In this guide, we discuss the concept of filing for bankruptcy multiple times and the limit to how often you can do it. We shall also explain the potential outcomes of subsequent filings and other alternatives you may consider.
So, let us get started.
Understanding the Different Types of Bankruptcy
Before we dive into the details of how often you can file for bankruptcy, let us have a quick overview of the two main types of bankruptcy that you can file.
By far, Chapter 7 bankruptcy is the most common type of bankruptcy filed in the United States. This type of bankruptcy eliminates a wide range of debts, including credit card debt, without requiring you to come up with a repayment plan.
Instead of agreeing on a repayment plan, Chapter 7 bankruptcy liquidates your assets to partially settle your existing debt. What remains unpaid after liquidating all of your assets is written off.
On the contrary, Chapter 13 bankruptcy provides you with a chance to keep all of your assets and work on an agreeable repayment plan with the lender. As long as you stick to the plan, your assets will be safe.
The debts that remain by the end of the re-negotiated repayment plan are fully discharged. The discharge of some of your debts provides you with the fresh start you need to reorganize your finances.
What Are the Time Limits for Filing Again?
Typically, the type of bankruptcy you filed in the previous case determines how long you need to wait before you file again.
The time starts to run from the date you filed the previous case with a bankruptcy court. The date the discharge was entered doesn’t affect the time limit in any way.
Filing Under the Same Bankruptcy Chapter
Here are the exact time-frames if you decide to file the same type of bankruptcy you filed last time.
a) Chapter 7 Bankruptcy to Chapter 7 Bankruptcy
If you want to file a second Chapter 7 bankruptcy and you had filed the same last time, you need to wait for at least eight years before filing the second case. This is the longest wait time between bankruptcy cases, as stipulated in the Bankruptcy Code.
b) Chapter 13 Bankruptcy to Chapter 13 Bankruptcy
If you had filed a Chapter 13 bankruptcy before and received a discharge, you must wait for at least two years before filing another Chapter 13 bankruptcy case. However, this is rare because the minimum length of a Chapter 13 bankruptcy repayment plan is three years.
Receiving another discharge before the end of the three-year repayment plan is only possible if you experience an unexpected hardship that makes it almost impossible to complete your repayment plan.
Filing under Different Chapters
When you want to file a second bankruptcy case under different chapters, the time-frame depends on what you had initially filed. The typical waiting periods are as follows:
a. Chapter 13 Bankruptcy to Chapter 7 Bankruptcy
If you had previously filed for Chapter 13 bankruptcy and now want to file for Chapter 7 bankruptcy, you must wait for at least six years. However, the waiting period can be waived if you managed to pay 100% to your unsecured creditors in the Chapter 13 repayment plan.
The time-frame can also be waived if you managed to pay at least 70% of your total debts, and the original Chapter 13 bankruptcy case was found to be in good faith.
Since Chapter 13 bankruptcy can take up to five years to complete, it is possible to file for a Chapter 7 bankruptcy one year after receiving your Chapter 13 bankruptcy discharge.
b. Chapter 7 Bankruptcy to Chapter 13 Bankruptcy
You can also file for a Chapter 13 bankruptcy just after receiving your Chapter 7 bankruptcy discharge, but you will not be eligible to receive a Chapter 13 discharge in your second case. Typically, if a court granted your first discharge under Chapter 7 bankruptcy, you must wait for at least four years before you file for a Chapter 13 case.
What If You Didn’t Receive a Discharge in the First Case?
In most cases, you can file for a second bankruptcy case and receive a discharge even if you didn’t receive a discharge in the first case. However, that is not always the case.
One thing you must keep in mind is that you lose the benefits of automatic stay when you file two bankruptcy cases in quick succession. An automatic stay is an order that restricts creditors from contacting collection agencies to act on their behalf.
If the court dismissed the first case, you could file again unless the same court orders otherwise. A 180-day wait period may apply if you failed to obey court orders or voluntarily dismissed the case.
If the court denied your discharge, you might still file another case, but you will not be entitled to discharge for the list of debts outlined in your first case. If you ever find yourself in such a situation, seeking advice from an experienced online bankruptcy attorney is always good.
Do You Need Help Filing a New Bankruptcy Case?
If things are not working according to plan and you need to file a second bankruptcy case, we can discuss your situation and advice you accordingly. We value privacy, and you can be sure that whatever you tell us will remain between you and us.
Contact us today to schedule an appointment with one of our experienced online bankruptcy attorneys and let us help you take control of your financial situation. We will gladly go over your options and see how we can proceed.