How Many Times Can You File Bankruptcy?

We often get asked what at face value seems like a relatively simple question: how many times can you file bankruptcy? There is no hard-and-fast rule limiting the number of times an individual can file for bankruptcy protection. However, there are limitations and practical considerations that effectively limit the number of times a person can benefit from consumer bankruptcy.

While the basics are straightforward, more complex determinations come into play if you have had a prior bankruptcy case dismissed. We’ll provide an overview of the general limitations below, but speaking with a local bankruptcy lawyer about your specific situation is always the best way to determine your options and avoid the many potential complications of the bankruptcy code.
Limitations on Frequency of Bankruptcy Filings
While the time-related limitations on second or successive bankruptcy cases are typically discussed in terms of time between filing, this waiting period does not actually prevent you from filing an additional bankruptcy case. The statutory limitation actually refers to the availability of a discharge in the second or subsequent bankruptcy case. So, when you hear shorthand like, “you can’t file again for eight years,” it’s generally not technically true.

However, the benefits of bankruptcy are significantly limited if the debtor is not eligible for a bankruptcy discharge. This is especially true with Chapter 7 bankruptcy cases, since the discharge is the primary purpose of a Chapter 7 bankruptcy case. Therefore, it would usually be pointless to file a second Chapter 7 case before the waiting period had expired. In addition, a filing undertaken with knowledge that a discharge wasn’t available, such as for the sole purpose of delaying an impending collection action, could be deemed abusive.

Because the discharge is not the core benefit in a Chapter 13 bankruptcy case, the analysis is a bit different. A Chapter 13 case in which a discharge of remaining unsecured debt is not an option may still be beneficial, since the debtor can still take advantage of the three to five year repayment plan to spread out past-due payments and cut down on accruing late fees and other charges. In addition a “no discharge” chapter 13 can still stop a foreclosure or a repossession.

Waiting Period for Subsequent Chapter 7 Cases

The waiting period between Chapter 7 discharges is longer than the waiting period between Chapter 13 cases involving discharge or between a Chapter 7 case and a Chapter 13 case. The primary reason for the difference is that Chapter 7 is used to wipe out unsecured debt through a fairly quick and easy process, while Chapter 13 debtors typically pay a significant portion of their outstanding debts through the plan.

The U.S. Bankruptcy Code precludes granting a discharge in a Chapter 7 bankruptcy case if the debtor has previously received a discharge in either:

• A prior Chapter 7 case that was filed within the eight years preceding filing of the current case, or
• A prior Chapter 13 case that was filed within the six years preceding filing of the current case

In other words, while it is the prior discharge that creates the lock-out period, time is counted from commencement of the prior case, not from the date of discharge.

Although this limitation won’t affect most consumer debtors, the eight-year period applied to prior Chapter 7 cases also applies when the consumer has previously received a discharge in a Chapter 11 reorganization case.

Waiting Period for Subsequent Chapter 13 Cases

The waiting period for Chapter 13 debtors who want to receive a discharge in the second or subsequent case is shorter. A bankruptcy court may not grant a discharge in a Chapter 13 case if the debtor:

• Received a discharge in a Chapter 7 or Chapter 11 bankruptcy case filed within the four-year period preceding filing of the current case, or
• Received a discharge in a Chapter 13 case filed within the two years before filing of the current case

Note that the lock-out period relating to a prior Chapter 13 case rarely comes into play, since a successful Chapter 13 case typically takes three to five years to complete. There generally isn’t enough time to file a Chapter 13 case, receive a discharge, and then file again within two years. Some exceptions would be when the debtor received a hardship discharge or paid the previous case out early.

A debtor who is not eligible for discharge based on these limitations may still be able to use the Chapter 13 bankruptcy process to break up delinquent debt into manageable payments across a three to five year plan.

Other Limitations Created by Prior Bankruptcy Filings

The limitations described above--the ones most commonly referenced in connection with questions like “How long do I have to wait to file bankruptcy again?”--apply when the prior case was successful and ended in discharge. However, prior unsuccessful bankruptcy cases may also impact the availability of discharge. In addition, previous filings affect the application of the automatic stay, which is a critical tool for many bankruptcy petitioners.

Under Section 109(g) of the Code, an individual may not file a new bankruptcy case if within the past 180 days he or she:

• Has been a debtor in a case that was dismissed by the court because the debtor willfully failed to comply with a court order, 
• Has been a debtor in a case that was dismissed by the court because he or she or failed to appear in court, or
• Has been a debtor in a case voluntarily dismissed after a creditor requested relief from the stay

Another limitation on the power of subsequent bankruptcy filings is that a debtor who has dismissed or had a Chapter 7, 11, or 13 case dismissed within the preceding year is only granted an automatic stay for 30 days. If two or more cases have been dismissed within the one-year period, the automatic stay doesn’t take effect at all.

The bottom line is that the waiting periods for filing a subsequent bankruptcy case, having an automatic stay entered, and being eligible for a discharge are far more complex than “you have to wait eight years” implies. A free consultation with a local bankruptcy attorney can help untangle your options and any limitations or loss of benefits you may face in filing a subsequent bankruptcy case.