How Often Can You File Bankruptcy?
There is no limit on the number of times you can file for bankruptcy. On the other hand, there is a limit on how often you can qualify for a bankruptcy discharge. So the question is not so much how often can you file for bankruptcy, but how often can you file and receive a discharge?
What Is a Bankruptcy Discharge?
A bankruptcy discharge allows you to eliminate most of your debts after a certain amount is paid to creditors. In Chapter 7, this means liquidating non-exempt assets. In Chapter 13, it involves paying creditors back in a repayment plan over the course of three or five years.
But what happens if another financial catastrophe strikes in the middle of your bankruptcy, or soon after you already received a discharge? When can you file another bankruptcy petition?
How Soon After Your Last Bankruptcy Can You File for Another One?
The answer depends on two things: what chapter of bankruptcy you filed previously, and what chapter you wish to file now.
Chapter 7 to Chapter 7: For Chapter 7, which is considered the fastest bankruptcy when it comes to eradicating debt, there is an eight-year wait period from the date of your bankruptcy filing.
Chapter 13 to Chapter 7: If you filed under Chapter 13, you must wait six years before filing under Chapter 7. In some cases, however, this rule may be lifted. If you repaid 70% or more of your unsecured debts and did your best to remain current with the repayment plan, you may be able to file a Chapter 7 earlier. In some cases, your Chapter 13 bankruptcy can be converted into a Chapter 7 bankruptcy if you can show financial hardship.
Chapter 13 to Chapter 13: Those who have been granted Chapter 13 discharges must wait two years before filing a second Chapter 13 discharge.
Chapter 7 to Chapter 13: If you filed under Chapter 7, you must wait four years before you can file under Chapter 13. For more details; talk to a Memphis Bankruptcy Attorney today.
Why Are These Rules in Place?
These rules were put in place to prevent abuse of the bankruptcy system. When a petitioner files for bankruptcy, they are saying that they are so hopelessly in debt, that they’ll never be able to climb their way out of it. Bankruptcy affords them some reprieve and gives them a better option than facing multiple lawsuits from creditors.
On the other hand, the system has checks in place to prevent chronically bankruptcy individuals from taking out lines of credit and then discharging them in bankruptcy. In cases where the court suspects fraud or bad faith on the part of the petitioner, they may prevent the filer from ever filing for bankruptcy again.
What if Your Previous Case Was Dismissed?
If your prior bankruptcy petition was dismissed with prejudice — meaning you failed to follow a directive of the court, or voluntarily dismissed a bankruptcy after a creditor filed for relief from an automatic stay — you will have to wait at least 180 days before filing a new bankruptcy case.
If your prior bankruptcy petition was dismissed without prejudice, you may be able to file another bankruptcy petition immediately.
Talk to a Memphis Bankruptcy Attorney Today
If you’ve previously filed for bankruptcy and need to file a second one, The Sweeney Law Firm, P.C. can help you through the process.