Recently, a past client came to our offices asking, “How often can I file for bankruptcy?” Some may find this surprising. We may not see it on Wall Street, but the U.S. economy has struggled for a long time. So, it is not uncommon for a person to go through cycles of doing well, only to have their rug pulled from under them. While at one time multiple bankruptcies in a lifetime were unheard of, today it is not surprising. Nevertheless, the law does place some limits on filing multiple bankruptcies.
1. Filing a Chapter 7 after a Chapter 7 – If a Chapter 7 bankruptcy resulted in a discharge, you must wait eight years from the date you filed last to then file Chapter 7 again.
2. Filing a Chapter 13 after a Chapter 13 – If a discharge of debts occurred with a Chapter 13, you cannot receive another Chapter 13 discharge until after two years of the first filing.
3. Filing a Chapter 7 after a Chapter 13 – If the initial discharge came due to a Chapter 7 bankruptcy, you are not eligible for a Chapter 13 for at least four years.
4. Filing a Chapter 13 after a Chapter 7 – Here, you must wait six years from the date of the first filing before a succeeding Chapter 7 petition. However, this does not apply if all the unsecured debts are paid or if you paid 70 percent of the unsecured debt and the court determines you gave your best effort to a plan proposed in good faith.
Regardless, there are some additional restrictions. The court may obstruct you from filing another case for a particular time. Typically, this occurs if the initial petition was dismissed with prejudice. In many cases, it is typically a 180-day bar because either you failed to obey the court’s order or they believe you are in some way abusing the bankruptcy system.
Do you have questions? Please contact us if you would like to talk about the limits on filing multiple bankruptcies.