You can file bankruptcy as often as you choose to do so. The Bankruptcy Code does not limit the number of times a person may file for bankruptcy during his or her lifetime. Legislators understand that some individuals may experience a financial crisis that leads to bankruptcy multiple times. Therefore, they did not restrict people from filing for bankruptcy again.
However, the Bankruptcy Code does restrict the number of bankruptcy discharges a person may be eligible to receive during a specific period. Therefore, you can file bankruptcy again, but whether you qualify for a bankruptcy discharge depends on your previous bankruptcy filing.
What is a Bankruptcy Discharge?
The main purpose of filing a Chapter 7 or Chapter 13 case is to eliminate debts that you cannot afford to repay. A bankruptcy discharge is a court order that eliminates your legal liability to repay certain debts. Creditors cannot take any actions to collect a debt that is discharged through bankruptcy.
Most debts are eligible for a discharge in bankruptcy. For example, you can generally get rid of your medical debts, credit card bills, personal loans, old rent payments, and most personal judgments by filing for bankruptcy relief. Most tax debts, alimony, student loans, child support, and debts owed to the government are not dischargeable in bankruptcy.
Also, a bankruptcy discharge does not eliminate a secured lien on property. Therefore, you cannot get rid of a mortgage or car title loan through bankruptcy, but you could give up the property in full satisfaction of the loan if you do not want to continue paying the loan.
Therefore, filing bankruptcy without obtaining a bankruptcy discharge can be a waste of time and money. Without the discharge, you continue to owe all your debts even though you filed for bankruptcy relief.
However, there could be instances in which filing another bankruptcy case, even if you do not receive a bankruptcy discharge, could be beneficial. For instance, filing a Chapter 13 immediately after a Chapter 7 to stretch out debts that were not dischargeable in the Chapter 7 case could prove helpful. Filing bankruptcy again that soon can be tricky. It is best to consult an experienced bankruptcy attorney before attempting back-to-back bankruptcy filings.
How Often Can You Receive a Bankruptcy Discharge — The 2-4-6-8 Rule
As discussed above, you can file bankruptcy again whenever you desire, but you may or may not be eligible for a bankruptcy discharge. Therefore, the actual question to ask is whether there is a waiting period between bankruptcy discharges. The answer is yes.
The waiting period between bankruptcy discharges typically depends on two pieces of information: the chapter of bankruptcy previously filed and the chapter of bankruptcy being filed now. Assuming that you obtained a bankruptcy discharge in your previous bankruptcy case, the 2-4-6-8 Rule applies.
Under the 2-4-6-8 Rule, you cannot receive another bankruptcy discharge for 2, 4, 6, or 8 years after receiving a previous bankruptcy discharge. How do you know which waiting period applies in your case? You look at your previous bankruptcy filing and the chapter of bankruptcy you want to file now. In short, it depends on the different types of bankruptcy.
Therefore, the waiting period between bankruptcy discharges is determined as follows:
- Two Years — (Chapter 13 to Chapter 13) — The waiting period between two Chapter 13 cases is two years to be eligible for a discharge.
- Four Years — (Chapter 7 to Chapter 13) — The waiting period between a Chapter 7 case and a Chapter 13 case is four years to be eligible for a discharge.
- Six Years — (Chapter 13 to Chapter 7) — The waiting period between a Chapter 13 case and a Chapter 7 case is six years to be eligible for a discharge.
- Eight Years — (Chapter 7 to Chapter 7) — The waiting period between two Chapter 7 cases is eight years to be eligible for a discharge.
The time limits for bankruptcy discharges are calculated from the filing date of the previous bankruptcy case. In other words, the waiting periods run from filing date to filing date, not discharge date to filing date. In recent years, we see many folks who are looking to file a Chapter 13 after a Chapter 7.
What About Cases That Did Not Receive a Discharge?
If you did not receive a discharge in your previous bankruptcy filing, the waiting period to file another bankruptcy case to receive a discharge might be shorter. For example, if the court dismissed your previous bankruptcy case, you might be able to file another bankruptcy case and be eligible for a bankruptcy discharge in as little as 180 days. However, if the court denied your bankruptcy discharge, you might not be able to discharge the debts listed in your previous bankruptcy case even though you file another bankruptcy case.
If your case was dismissed or your bankruptcy discharge was denied, it is best to consult with an experienced bankruptcy lawyer before filing bankruptcy again. These special circumstances can impact the general time limits between bankruptcy discharges.
Explore Your Debt Relief Options Before Talking to an Attorney
If you are curious about debt-relief options, Ascend can help. We have several ways for you to compare your debt relief options before talking to an attorney. Take a short assessment to begin comparing your debt-relief options.