Debts can pile up out of nowhere and become insurmountable before you have time to count your finances. Sometimes the only reasonable solution is to file for bankruptcy and have the debts discharged, either partially or entirely. But what happens if you file for bankruptcy and only a short while later you are blindsided by new debt? Can you file for bankruptcy again?
Restrictions on Multiple Bankruptcy Filings
Technically, there is no legal limitation to how often you can file for bankruptcy. There are, however, restrictions to how often you can have your debt discharged, which is essentially the entire purpose of filing for bankruptcy. If you recently filed for bankruptcy and need to file again, your eligibility for debt discharge will be influenced by what type of bankruptcy you filed in the past, what type you are filing now, whether or not your previous debts were discharged, and when you filed the most recent bankruptcy.
Time restrictions on multiple bankruptcy filings include:
- Chapter 7 to Chapter 7 filing: Did you receive a debt discharge in a Chapter 7 filing in the past? If so, you cannot receive the same type of discharge again until 8 years have passed.
- Chapter 13 to Chapter 13 filing: If you received a debt discharge due to a successful Chapter 13 filing and want to use one again, you must wait 2 years. Chapter 13 bankruptcy involves creating a repayment plan that lasts 3 to 5 years; if you file again, you may have to balance two repayment plans, which is not ideal.
- Chapter 7 to Chapter 13 filing: Sometimes cleverly called Chapter 20 bankruptcy, using a Chapter 13 filing can provide a debt discharge and new repayment plan if your previous Chapter 7 filing was 4 or more years ago.
- Chapter 13 to Chapter 7 filing: You must wait 6 years to receive a Chapter 7 discharge if you previously gained a Chapter 13 discharge. However, if you have paid off all your Chapter 13 unsecured debts, or at least 70% of them and showed good faith the entire time, this 6-year limitation can be waived.
Additional Limitations to Multiple Bankruptcies
You should be aware that the court can deny your bankruptcy filing at any time. This blunt enforcement is usually only seen in cases where the filer has disobeyed the court, intentionally abuses the bankruptcy system, uses fraud in their filings, or has never shown a good effort to repay their debts in previous filings. Furthermore, automatic stays can be quite limited or not granted at all in subsequent bankruptcy filings, so you might not get the collections defense you expected when filing a second or third time.
For more information regarding your rights and options when you are facing bankruptcy, contact Chicago Bankruptcy Attorney Joseph P. Doyle. Our law firm has a deliberate focus on bankruptcy cases, which has given us unrivaled legal prowess and a long list of successful cases, backed by an impressive list of appreciative client testimonials.