The filing of a bankruptcy case is stressful and is often viewed in a negative way. However, many people experience involuntary financial hardship due to job loss and changes, serious illness or a personal crisis. Misfortune can strike more than once, but you can also file for bankruptcy more than once and get the debt relief you need.
Know the limits on how often you can file for bankruptcy and receive a discharge of your debts.
How Often Can You File Bankruptcy?
The rules vary depending on the type of bankruptcy you filed before.
Chapter 7: You can file a new case and receive a discharge generally:
- Eight years after filing a prior Chapter 7 case
- Six years after filing a prior Chapter 12 or 13 case
Chapter 13: You can file a new case and receive a discharge generally:
- Four years after filing in a Chapter 7, 11 or 12 case
- Two years after filing a prior Chapter 13 case
Different time limits may apply if your previous case didn't end with a discharge. Discharge is the court's order ending your liability for your debts, and your creditors' ability to collect. For example, sometimes cases are dismissed before the bankruptcy process is complete.
Talk to a bankruptcy lawyer to see if a prior dismissed case would impact your plan to file again. Often you can file a new case sooner than the limits listed above if you weren't granted a discharge.
Chapter 20 Bankruptcy
There is no actual Chapter 20 bankruptcy. A Chapter 20 bankruptcy refers to the common practice of filing a Chapter 13 case after receiving a Chapter 7 discharge (7 plus 13 equals 20).
First, the Chapter 7 discharge relieves a filer of dischargeable debts and personal liability. The Chapter 13 bankruptcy is later filed to restructure remaining secured and nondischargeable debts.
Bankruptcy law reform means longer time limits between filings, so it's harder to use this strategy than in the past. However, this type of successive bankruptcy filing can be an effective way to regain financial stability if you have significant dischargeable, secured and nondischargeable debts.
Multiple Filings Limit Automatic Stay Benefits
A key benefit when someone files for bankruptcy is the protection of the automatic stay. This legal mechanism works by stopping all creditor collection actions and lawsuits against you while your case works through the bankruptcy process. It gives you breathing room and preserves the financial status quo during your case.
Generally, the automatic stay goes into effect when you file your petition to start your case, and lasts through most of your case, unless the court says otherwise.
However, automatic stay protection only lasts 30 days if you have filed for bankruptcy once before in the previous year. If you have filed two or more times in the previous year, no automatic stay is granted.
Filing and Discharge: What's the Difference?
Be aware that discharge isn't the ultimate goal in every bankruptcy case. Even if you file for bankruptcy and you can't qualify for a discharge, based on timing issues, other parts of the bankruptcy process may help you manage your finances.
For example, automatic stay protection and a Chapter 13 repayment plan may help you, even if you don't qualify for discharge at plan completion.
A bankruptcy lawyer can best help you assess the options, and you can make the best decision for your situation.
Questions for Your Attorney
- How do multiple bankruptcy filings affect my credit scores?
- How often do creditors challenge repeat bankruptcy filings on the basis of fraud?
- Is there any lifetime limit on filing for bankruptcy?