How often can you file bankruptcy?

While you can file bankruptcy any number of times you want, bankruptcy law imposes a limit on how often can you get a discharge from your debts, and if you are violating that limit, your case is very likely to just get thrown out.

First of all, understand that you can file bankruptcy under four chapters – chapter 7, chapter 11, chapter 12 and chapter 13 – and the term limit varies depending on the chapters.

A chapter 7 bankruptcy filing allows most of your debts to be dissolved, leaving you with nearly nothing to pay off, and so is also called a ‘fresh start’.

Chapters 11, 12 and 13 deal with restructuring debt obligations with the goal of enabling the debtor to pay them off at more favorable terms such as over a longer period of time or maybe only partially.

According to bankruptcy law, chapter 11 is largely for businesses, while chapter 12 is exclusively for farm and fishing families, and chapter 13 is open for all individuals.

The term limits for getting a discharge again

If you have received a discharge from your debts under a chapter 7 filing previously, you are ineligible for another ‘fresh start’ under the same chapter for 8 years from the date of the first filing.

But in case you got a discharge under chapter 7 before, and are filing bankruptcy under chapter 13 this time, you need a gap of 4 years to become eligible for a discharge.

On the other hand, if your last discharge was under chapter 13, bankruptcy law states that you become eligible to file for a chapter 7 bankruptcy in 6 years time. However, the time period for another chapter 13 bankruptcy will now just be 2 years.

There is an exception for these term limits if your first filing was a chapter 13. In that case, you may file earlier and be eligible for a discharge if you have paid off all your obligations from the first case, or if you have paid off 70 percent of them and can prove that is all you could achieve with your utmost best efforts.

Re-filing after dismissal

In case your first bankruptcy filing was dismissed for some reason, you may file again at any time and be eligible for a discharge, but remember that the automatic stay on debt collection that comes into effect with the filing will be limited to just 30 days if a year hasn’t passed since the first filing.

And in case this is your third filing within a year, bankruptcy law says that you don’t get any stay. This rule is in place to keep a check on serial filers who may try to keep the stay going by just filing repeatedly.

However, you will get a normal stay if the filing that was dismissed was under chapter 7 and your new filing is under chapter 13.

There is also a provision in bankruptcy law that allows the court to bar you from filing a new case for six months if your previous filing was dismissed for either failing to follow the court’s orders or prosecuting your case properly, or backing out after a creditor successfully applied for relief from the automatic stay.