Sometimes life is challenging, and some people can’t catch a break these days. The pandemic caused an upheaval in employment and income potential for some, and inflation is causing further disruptions for people just trying to live their lives in good faith. Bankruptcy is a valid option for many, but what about those who have experienced multiple financial crises? Can an individual file for bankruptcy more than once?
The overreaching answer is simple – you can file for bankruptcy as many times as needed within the same chapter of bankruptcy law. However, the wait time between filings will differ based on the chapter under which you are filing. Here is the information you need to know.
Chapter 7: This process is typically the fastest way to get out of debt via bankruptcy, but it also represents the longest wait time for those who wish to file again. If your debts were discharged under a Chapter 7 bankruptcy, an eight-year wait time is required before you can file again – calculated from the date you initially filed.
Chapter 13: The law requires only a two-year wait to re-file for Chapter 13 bankruptcy. However, this is unlikely to occur, as Chapter 13 debt restructuring generally sets up a three-to-five-year repayment plan.
Can I File Under a Different Chapter?
If you have already filed for bankruptcy under one chapter, you may be able to shift your case to another chapter. However, this scenario also requires a waiting period.
- There is a six-year required waiting period between a previous Chapter 13 filing and a new Chapter 7 bankruptcy filing. However, this waiting period may be waived if at least 70% of Chapter 13 unsecured debts have been paid off, and the individual can prove a good faith effort to work with creditors.
- There is a four-year waiting period between a discharged Chapter 7 filing and a new Chapter 13 bankruptcy filing. The waiting period could be avoided if you agree that your debt cannot be discharged under Chapter 7 and you set up a payment plan to repay non-dischargeable debt. This is sometimes referred to as a “Chapter 20” filing, which we will discuss in our next article.
When a Case is Dismissed with Prejudice: If a case was dismissed with prejudice, it indicates that the judge believed there was bankruptcy fraud – whether the individual was hiding assets, omitting pertinent information, filing numerous cases, or disobeying the court’s orders. The final dismissal order will typically prevent filing for bankruptcy for a specified period of time, even permanently.
Filing More Than Once – Impact on Credit Score
Filing for bankruptcy multiple times may cause long-term damage to credit, lowering credit scores and making it harder to meet the financial criteria for mortgages or credit cards.
Chapter 7 bankruptcies remain on an individual’s credit report for ten years, while Chapter 13 filings will be reported for seven years. Filing twice will result in both filings appearing on the report, each for their allotted duration.
The good news is that a credit score can be redeemed if credit is responsibly managed post-bankruptcy. Before filing for bankruptcy a second time, you may wish to try negotiating with debt collectors or pursuing a debt consolidation loan.
The best strategy when considering bankruptcy – whether for the first time or a subsequent filing – is to speak with an experienced bankruptcy attorney. They understand all the requirements and implications of a bankruptcy filing and can advise you as to your best course of action.
Richard V. Ellis is a trusted Sarasota bankruptcy attorney who has helped hundreds of individuals and families regain their financial footing.