So, you’ve filed for bankruptcy before and thought that would be a good fresh start. Unfortunately, things don’t always go your way despite giving your best efforts. Now that you’re facing another financial hardship, you might be wondering, how often can you file for bankruptcy?
The short answer is as many times as you need. There’s no limit to the number of bankruptcy filings you can do, but there are waiting periods before you can receive another debt discharge. Time limits are necessary to prevent the abuse of the Bankruptcy Code. That’s what we’re going to discuss below.
What Are the Waiting Periods for Bankruptcy Filings?
The time limits depend on the type of bankruptcy you previously filed, what bankruptcy type you want to file now, and whether your previous debts were discharged. Let’s take a quick review of the most common types of bankruptcies you can file and how many times you can file for bankruptcy.
Chapter 7 is the most common bankruptcy filing individuals make. Some businesses with little to no assets may also file for this type of bankruptcy. With Chapter 7, your unsecured debts, such as credit card debt and medical bills, are discharged. If you have assets with value beyond the exemptions, they will be liquidated to pay off your debt. The exemptions are determined by your state.
When can you file for Chapter 7 bankruptcy if your first filing is Chapter 7?
You can file for Chapter 7 after Chapter 7 eight years from the date of your first bankruptcy filing. It’s the longest waiting period among the other types because Chapter 7 is the quickest way to get debt relief without asking you to enter into a repayment plan.
You can file for Chapter 13 after Chapter 7 four years later. It will allow you to pay off new taxes, arrears on domestic support, missed mortgage, and missed loan payments, among others. When you file for Chapter 13 soon after you received Chapter 7 debt discharge, it’s now called Chapter 20 bankruptcy.
Businesses that face financial difficulties but want to reorganize and recover often file for Chapter 11. Under this type, you enter into a debt repayment plan that the court supervises. You also create a plan to remain profitable and cut costs, so you can continue your business while paying your debt.
How often can you file chapter 11?
As often as you need. There’s no waiting period to be eligible for another debt discharge. You can file for another Chapter 11 bankruptcy anytime if your first filing was Chapter 11. If you previously filed Chapter 7 or Chapter 13, there’s also no waiting period to be eligible for Chapter 11.
Individuals who want to keep their properties while getting back on track can file for Chapter 13. Similar to Chapter 11, you enter into a debt repayment plan, which allows you to pay back your debt in installments within three to five years. Businesses that still earn consistently may also file for this type.
How soon can you file Chapter 13 after Chapter 13?
You can file for another Chapter 13 bankruptcy after two years since you first filed for a Chapter 13 bankruptcy case and your debt was discharged. This rarely happens, though. Remember, repayment plans for Chapter 13 are a minimum of three years. So, you must have an unexpected financial hardship to receive a debt discharge before the three years is over.
If your first filing is Chapter 13 and you want to file Chapter 7, you have to wait for six years to elapse. However, if you’ve already paid all your unsecured debt or at least 70% of your unsecured debts in the repayment plan, the waiting period doesn’t apply to you.
Here’s a table to give you a clearer view of the waiting periods:
What If Your Debts Were Not Discharged in the Previous Filing?
In some cases, your debts may not be discharged in a bankruptcy proceeding. If that’s the case, these waiting periods we discussed above don’t apply to you. You can file anytime for another bankruptcy case.
Some debts that are not discharged include:
- Child support
- Debts incurred due to willful and malicious injuries to another person or property
- Fines and penalties from the government
- Student loans
- Debts incurred due to intoxicated driving
- Housing fees
Should You File for Another Bankruptcy?
As much as possible, it’s best to avoid filing for bankruptcy. While it’s generally a quick escape from most of your debts, particularly the unsecured ones, bankruptcy leads to many consequences.
For one, bankruptcy ruins your credit score. It will appear on your credit report for 10 years, which will affect your borrowing abilities. You may still be able to secure new loans, but you’re more likely to pay higher interest rates than the standards.
Following the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), you’ll also have to attend mandatory credit counseling and financial management courses. You might also lose your properties and you’ll be required to make ongoing payments to your creditors.
What Can You Do to Avoid Another Bankruptcy?
A bankruptcy filing is supposed to give you debt relief and allow you to take back control of your finances and start anew. So, doesn’t it make sense to do all you can to have a healthy financial life and avoid a second (or third) filing?
Here are some tips to help you get back on track and avoid another bankruptcy:
1. Develop a Budget Plan and Stick to it
Without a budget plan, it’s easy to lose track of where your money goes. You’ll end up missing payment dues because you’ve already spent all your income before the next payday. So, as cliché as it may sound, budgeting is necessary. You need to know what your needs are, how much you must set aside for those needs, when you should pay your bills, and so on. The most important thing here is that you stick to your budget plan so that you won’t miss any bills and end up overspending on unnecessary stuff.
2. Spend Within Your Means
Now that your previous debts were discharged, do your best efforts to avoid accumulating debts that you cannot pay.
For instance, don’t buy a home that is beyond your capacity to pay. Aside from paying higher interest rates, you know that other expenses come with owning a house, such as insurance and maintenance.
If you managed to secure a new credit card, use it only when necessary and pay off the balance in full every month. Cut your spending and think twice before you buy any wants.
3. Build Your Emergency Fund
Unexpected things happen, and you don’t want to end up with huge bills to pay, such as medical bills. So, try your best to build your emergency fund. It will give you peace of mind, too, knowing that you have something you can spend on rainy days.
4. Seek Multiple Income Sources
You should also rethink your income sources. Aside from being a full-time employee, you may think of a side hustle you can do to earn extra cash. There are several online jobs you can take in your free time, such as consulting or content writing.
You can also offer services in your neighborhood, such as house cleaning, babysitting, tutoring, dog sitting, and so on. If you have a knack for arts and crafts, you can sell your creations on Etsy. Home Cooked meals and baked goodies are also good sources of extra cash.
5. Seek Professional Help
Knowledge is power. Yes, that’s another cliché, but it’s true. Don’t hesitate to seek professional financial help to increase your financial knowledge so that you’ll know how to manage your money better. These three organizations offer free debt and credit counseling:
Nobody wants to get deep into debt to a point of bankruptcy, much more to need a second bankruptcy filing. Unfortunately, it does happen despite your best efforts. How many times can you file for bankruptcy? You can file as many bankruptcy cases as you need, although you typically need to wait two to eight years since your first filing.
Meanwhile, you can take steps to get back on your track and improve your financial life. Keep in mind our tips above to manage your money better, particularly about budgeting and spending. Don’t hesitate to seek professional help so that you’re armed with the right knowledge about your finances and how to get out of debt. It may take time to build your credit and your bank account, but with consistent efforts and commitment, you can recover and improve your life.