One of the most frequently asked questions that I get from potential clients is: How many times can I file a bankruptcy case?
Another is: How long must I wait to file in between bankruptcy cases?
There is No Limit to The Number of Bankruptcy Cases One Can File
The answer to the first question is, you can file bankruptcy as many times as you want (assuming you are eligible to file bankruptcy under a given chapter–for example, you cannot file a Chapter 13 case if you have unsecured debts exceeding $361,000).
The real question is whether or not you can receive a discharge of debts in the new bankruptcy case, as that is usually (although not always) the reason for filing a bankruptcy. And the answer to that question depends on which chapter you are filing, and under which chapter you previously filed and received a discharge.
Time Between Bankruptcy Filings
Here is the definitive quick-reference guide to answer the question: How long must you wait in between bankruptcy filings in order to receive a discharge of debts in the newly filed bankruptcy case?
Case to be filed–Chapter 7: You cannot receive a discharge if you received a discharge in a prior Chapter 7 or Chapter 11 case filed (commenced) within 8 years of the filing of the “new” case, or received a discharge in a Chapter 13 case filed within 6 years prior UNLESS the payments made in the Chapter 13 totaled 100% of allowed claims in the case, or at least 70% of the claims and the plan was proposed in good faith and was the “best efforts” of the debtor.
Case to be filed–Chapter 13: You cannot receive a discharge if you received a discharge in a prior Chapter 7, 11, or 12 case filed (commenced) within 4 years prior to the filing of the “new” case, or a received a discharge in a Chapter 13 case filed within 2 years prior of the “new” case.
Case to be filed–Chapter 11: Same as Chapter 7, above.
Important Factors to Remember:
Note that the date the discharge was entered in the prior case is completely irrelevant. It is the date the case was filed that starts the time clock running for this purpose.
Also note that if the prior case did not result in a discharge, but was instead dismissed, then there is no time limit on filing a new case (absent a court order to the contrary)
Other Reasons to File Besides Discharge
There are other reasons to file bankruptcy, particularly a Chapter 13 case, besides getting a discharge. The automatic stay in bankruptcy, which prevents creditors from taking any collections actions during the bankruptcy case, still applies regardless of the ability of the debtor to discharge debts. So how is this helpful? Let’s say you owe tax debts and the IRS wants you to pay them in full within 24 months. By filing a Chapter 13 case, you can stretch those tax payments over 60 months, at zero percent interest! Same thing can be done with student loans, although unlike certain taxes, the student loans need not be paid 100% during the 60 month Chapter 13; thus, it may be necessary to file multiple back-to-back Chapter 13 cases to continue the protection on student loan payments.
These are all possibilities to discuss with a qualified and experienced bankruptcy lawyer in your area.
Image Courtesy of See-ming Lee