Bankruptcy

How Often Can a Business Get Its Debts Wiped out in Bankruptcy?

By Cara O'Neill, Attorney
Learn when a discharge is available in a business bankruptcy.

It depends. If you’ve already filed for bankruptcy and received a discharge (at least some of your obligations were wiped out), you might have to allow a certain period to elapse before you’ll be entitled to another discharge. How much time must pass (if any) will depend on the bankruptcy chapter you filed before, as well as the chapter you intend to file again.

When Seeking a Chapter 7 or 13 Discharge

Only an individual or sole proprietor is entitled to a discharge in Chapter 7 or Chapter 13 bankruptcy. If you’ve received a discharge in one of these capacities, and you’d like to receive another, here’s how long you’ll have to wait:

  • Filing for Chapter 7 bankruptcy after receiving a Chapter 7 or 11 discharge. The filer must wait eight years.
  • Filing for Chapter 7 bankruptcy after receiving a Chapter 12 or 13 discharge. The filer must wait six years (unless the filer paid 100% of unsecured claims or 70% of unsecured claims in a good faith plan).
  • Filing for Chapter 13 bankruptcy after receiving a Chapter 7, 11, or 12 discharge. The filer must wait four years.
  • Filing for Chapter 13 bankruptcy after receiving a previous Chapter 13 discharge. The filer must wait two years.

(To learn about unsecured claims, read What Are the Differences Between Secured and Unsecured Debt?)

When Seeking a Chapter 11 or 12 Discharge

The rules for filing and receiving a discharge under Chapter 11 or 12 are much easier to meet. First, an individual, sole proprietor, partnership, limited liability company, or corporation can receive a discharge in Chapter 11 or 12 bankruptcy, regardless of any previous discharge received. In other words, there’s no waiting time between discharges. (You can learn more about the different types of business entities in Who Can Authorize a Bankruptcy Filing on Behalf of a Business Entity?)

Exceptions exist, however. Specifically, you’ll want to be sure to tell your attorney if you (or the business entity) violated a court order, or had another case dismissed during the 180 days before your bankruptcy filing. In that case, you might not qualify for another discharge.

Go to the main business bankruptcy FAQ page.

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