How Often Can You File for Bankruptcy?
There is no limit to how often can you file for bankruptcy. Absent a few unusual circumstances, you can file as often as you want. But there are limits to how often you are eligible for a discharge after filing bankruptcy. Remember, there are two main reasons for filing bankruptcy: (1) temporary creditor protection via the automatic stay; and (2) more permanent creditor protection via a discharge. While there are some limitations on the automatic stay for repeated filers, Congress has placed stricter limitations on repeated attempts to receive a discharge. Both of these limitations are outlined below.
How Often Can You File for Bankruptcy and Receive a Discharge?
Candidly, discharge is the main reason for over 90% of all bankruptcies. So if you want to know how often can you file for bankruptcy and receive a discharge, there are three main inquiries:
1. Which Chapter are you now filing under?
2. Which Chapter did you previously file under?
3. Whether you received a discharge in the prior case?
How Often Can You File for Bankruptcy and Receive a Discharge in a New Chapter 7?
If you are filing a new Chapter 7 case, you are eligible for a discharge unless:
1. You received a discharge in a Chapter 7 or Chapter 11 bankruptcy case filed in the last 8 years (i.e., from the date of filing, not the date of the prior discharge);
2. You received a discharge in a Chapter 13 case filed within 6 years of the new case. This six year limitation does not apply, however, if you paid creditors in full or paid at least 70% of allowed claims and the prior case was filed in good faith and debtor made best efforts to repay creditors).
How Often Can You File for Bankruptcy and Receive a Discharge in a New Chapter 13?
If you are filing a new Chapter 13 case, you are eligible for a discharge unless:
1. you received a discharge in a Chapter 7 or Chapter 11 case filed in the last 4 years; or
2. received a discharge in Chapter 13 case filed within the last 2 years (Chapter 13 cases usually last 3 to 5 years for a discharge so it is unusual that successive Chapter 13 filings would ever not be allowed a discharge based).
Important Points to Emphasize When Asking How Often Can You File for Bankruptcy
The time periods mentioned above are from the date of filing and not the date of discharge. So for example, if you filed a Chapter 7 and did not receive a discharge for a year for some reason, you would only have to wait another 3 years to file a Chapter 13 (or 7 years to file another Chapter 7 bankruptcy). Likewise, none of these periods apply if your case was dismissed and you did not receive a discharge. Lastly, in a converted case, the date of filing should be the date of filing of the original petition (even if in a different Chapter) but this is not entirely clear.
There May Be Good Reasons to File Bankruptcy Even if You are Not Eligible for Discharge
Not all debtors need a discharge. Some people just need more time to pay off a debt. For example, if you had some non-dischargeable taxes and the IRS is unwilling to give you a reasonable repayment plan, you could file for a Chapter 13 bankruptcy and pay the tax debts in full over five years without penalties. This could also be done for student loans that are not dischargeable. Chapter 13 plan payments could be less than what creditors could obtain outside of bankruptcy and provide a debtor relief from overwhelming student loan debt. A similar strategy is to file a Chapter 13 bankruptcy immediately after receiving a Chapter 7 discharge which is informally referred to as a Chapter 20 bankruptcy. This is sometimes done for more time to pay off nondischargeable domestic support obligations arrearages.
Restrictions on Re-Filing If Previous Bankruptcy Dismissed With Prejudice
The bankruptcy court can actually prohibit a debtor from filing another bankruptcy case for up to 180 days. If your bankruptcy case is dismissed with prejudice, you cannot file another case for 180 days. This is rare but dismissal with prejudice can happen if you fail to obey court orders, file multiple cases to delay creditors, or otherwise abuse the bankruptcy process.
Limits on the Automatic Stay
The automatic stay stops collection efforts by creditors during bankruptcy. But if your first bankruptcy was dismissed and you file another case within one year of dismissal, the automatic stay is limited to 30 days. And if you have had two or more dismissals within one year of your new bankruptcy, no automatic stay is imposed. In either situation, you must file a motion to extend or impose the automatic stay in your new case and show good cause.
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