Filing for bankruptcy is a significant financial decision that nobody takes lightly, but it is a useful tool. It can provide relief for those facing insurmountable debt and provide a fresh start for their finances – but is it something that you can only do once, twice or as often as you want?
Many people find themselves facing bankruptcy more than once. The answer to how often you can file, though, depends on several factors, including the type of bankruptcy filed and the individual’s financial circumstances. Here is a breakdown of the different types of bankruptcy and the limitations on how often they can be filed:
Chapter 7 bankruptcy
Chapter 7, which is sometimes called a “total” or “straight” bankruptcy is the most common type of bankruptcy for consumers to file. There are no limits to how often someone can file for Chapter 7 bankruptcy, but an individual cannot receive a discharge of their debts through Chapter 7 bankruptcy if they have received a discharge in the past eight years.
Chapter 13 bankruptcy
Chapter 13, in which individuals with regular income reorganize their debts through a repayment plan that allows them to pay off their debts over a period of three to five years, is also fairly common.
You can file for Chapter 13 bankruptcy as often as necessary, but cannot receive a discharge of your debts through Chapter 13 if you received a discharge:
- In the past two years, if the previous bankruptcy was a Chapter 13
- In the past four years, if the previous bankruptcy was a Chapter 7
It’s also possible to convert a Chapter 13 bankruptcy to a Chapter 7 bankruptcy, which is sometimes done when people cannot afford to continue making the Chapter 13 payments.
If you’ve filed for bankruptcy in the past, don’t let shame or fear prevent you from filing again. The law acknowledges that economic distress is a very real problem for many people, and your bankruptcy won’t be denied simply because you have filed before.