There’s no question that declaring bankruptcy is a difficult and emotional decision. Should an individual file for bankruptcy or choose to find another way to pay off all debts? The pros and cons of each side are compelling. Although it creates short-term relief from creditors, it will affect how creditors see you in the future, and if there is a need for repeat filing in years to come.
What To Consider Before Repeat Filing For Bankruptcy
Before and after you file for bankruptcy, it is important to know that a Chapter 7 bankruptcy can remain on your
credit report for 10 years. In addition, it could affect your reputation and self-image. This is just after filing for bankruptcy and being discharged once. What if you are stuck with an unforeseen circumstance that lands you deeper in debt than the first time you filed for bankruptcy? Can you even file for bankruptcy twice?
The short answer is yes, you can file for bankruptcy twice, and even three times.
The most common types of personal bankruptcy are Chapter 7 and Chapter 13. Up to 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases. Chapter 7 Bankruptcy and Chapter 13 Bankruptcy, while very similar, have important differences that will affect your case and how often you can file for bankruptcy. Both Chapter 7 and Chapter 13 bankruptcies may be filed multiple times.
The Catch With Filing For A Second Time
There are rules that apply about when you can next file for bankruptcy and that is based on what bankruptcy code you were previously discharged from. To file for a second or third bankruptcy, there is always a waiting period between receiving a discharge from your financial obligations and filing again for bankruptcy.
If you did not receive a discharge from your previous bankruptcy filing, then you are not barred from filing again for bankruptcy. On the other hand, if you file again prior to letting the time elapse, you will not receive a discharge and your debts will remain intact.
Chapter 7 Bankruptcy Discharge
The typical time frame from filing for a Chapter 7 bankruptcy to being granted a discharge (or relief from debt) is 3-6 months. Once you have received a discharge from a Chapter 7 bankruptcy, you will be required to wait 8 years from the date of filing to be able to file for bankruptcy twice. Filing anytime before the end of that 8-year waiting period will result in the denial of your discharge in the second case. If that happens, you will be legally liable for all of your debts.
The exception to this is if you received a discharge from a Chapter 7 bankruptcy and want to file for a Chapter 13 bankruptcy. In this case, you must only wait 4 years from the date of the Chapter 7 bankruptcy filing to file for Chapter 13.
Chapter 13 Bankruptcy Discharge
Once you have received a discharge from a Chapter 13 bankruptcy, you will be required to wait 6 years from the date of filing to be able to file for a Chapter 7 bankruptcy. Filing anytime before the end of that 6-year waiting period will result in the denial of your discharge in the second case. If that happens, you will be legally liable for all of your debts. The exception to this 6-year waiting period is if you paid 100% of your unsecured debts, or if you received a Chapter 13 relief in good faith after paying at least 70% of your unsecured debts.
If you have received a discharge in a previous Chapter 13 bankruptcy, then you must wait 2 years from the date of the first filing to file another Chapter 13 bankruptcy. Doing so prior to the 2-year waiting period will result in the denial of your discharge and you will be liable for all debts that went unpaid throughout the Chapter 13 bankruptcy.