There’s no limit to how many times you can file for bankruptcy in your lifetime, but there are waiting periods you must adhere to between filings. These waiting periods depend on the specific chapters of bankruptcy you file under and whether your previous filings were successful.
Chapter 7 bankruptcy:
- You must wait 8 years after a successful Chapter 7 filing before filing again.
- If your previous Chapter 7 filing was dismissed within the past 6 years due to your failure to comply with court orders or provide required documents, you must wait 6 years to file again.
Chapter 13 bankruptcy:
- You must wait 4 years after a successful Chapter 13 filing before filing for Chapter 7.
- You can file for Chapter 13 again 2 years after a successful Chapter 13 filing, as long as you paid off at least 70% of your debts through the previous plan.
- If your previous Chapter 13 filing was dismissed within the past 6 years due to your failure to comply with court orders or provide required documents, you must wait 6 years to file for Chapter 13 again.
- There are a few exceptions to these waiting periods. For example, if you can demonstrate that you have experienced undue hardship since your last filing, you may be able to file again sooner.
- You can also file for a different chapter of bankruptcy than you used before without waiting the full period. For example, if you filed for Chapter 7 in the past, you can file for Chapter 13 now, or vice versa.
It’s important to consult with a bankruptcy attorney to discuss your specific situation and determine the best course of action for you.
Here are some additional things to keep in mind about filing for bankruptcy:
- Bankruptcy can have a negative impact on your credit score.
- You may lose some of your assets in a Chapter 7 bankruptcy.
- You will need to complete credit counseling before filing for bankruptcy.
It is not appropriate for everyone to file for Chapter 7 bankruptcy. Even if filing for Chapter 7 bankruptcy seems like the best option for you to reduce your debt, you should weigh the drawbacks first.
If your income is too high, you cannot file for Chapter 7.
You must not have any disposable income and make less than the state median income in order to qualify for Chapter 7. Individuals with disposable income are those who have money left over after covering their essential living expenses and can save. The means test can be used to get your disposable income.
If you have too much extra money than you need, you can’t just stop paying off your debt. While filing under Chapter 13 repayment plans is not permitted, you can still receive a bankruptcy discharge.
There Will Be a Brief Detriment to Your Credit
Prior to filing for bankruptcy, those who are able to make their monthly payments on time and maintain a high credit score will initially see a decline in their score. Additionally, your interest rates may rise momentarily. Nonetheless, declaring bankruptcy frequently improves a filer’s credit rating over time. You have the chance to raise your credit score right away if your bankruptcy discharge is approved.
Not All Unsecured Debts Are Erased by Chapter 7
Certain unsecured debts, such as child support or alimony, are never dischargeable in bankruptcy. Certain debts, such as tax obligations and certain student loans, may be difficult to discharge through bankruptcy. A common misconception is that filing for bankruptcy cannot be used to discharge student loan debt. According to the Bankruptcy Code, you may be able to discharge your student loan debt if repaying it would put you through extreme hardship. The Department of Justice gave courts more precise guidelines in late 2022 regarding what constitutes undue hardship. See if you qualify for this requirement by reading our article on how to file for bankruptcy while having student loans. Our group even produced a filing tool to facilitate the cancellation of student loans.
Some Property Types May Be Lost
Giving up some pricey things could be one of the trade-offs for receiving a bankruptcy discharge in a matter of months. We refer to these things as nonexempt property. In Chapter 7 bankruptcy proceedings, the bankruptcy trustee may sell assets of this kind to satisfy creditors. Having said that, Chapter 7 cases hardly ever involve this.
Your Bankruptcy Under Chapter 7 Others Are Not Protected by Filing (Like Co-signers)
Your only obligation to pay the debt is eliminated by Chapter 7. It does not relieve someone else of their debt. The only kind of bankruptcy that can shield a co-signer is Chapter 13, but that protection is limited to situations where you pay off the debt through your repayment plan.
What Is Bankruptcy Under Chapter 13?
For those seeking a fresh start, Chapter 7 and Chapter 13 bankruptcy are both effective debt relief options. Chapter 13 (also known as the “reorganization” bankruptcy) may be appropriate for you if you have a lot of disposable income, nonexempt assets that you wish to preserve, and the ability to adhere to a payment schedule.
The Price of Bankruptcy Filing
The cost of declaring bankruptcy can be high. The two required credit counseling and debt education courses, the court filing fee, and the cost of legal representation (should you decide to retain counsel) must all be taken into account. For Chapter 7 cases, the Bankruptcy Court levies a $338 filing fee, which, unless you are granted a waiver, you must pay. The court will dismiss your case if you fail to pay the fee in full, even though you are able to request to pay it in four installments. In addition to the court filing fees, you will be required to pay the attorney fees of any law firm or bankruptcy attorney you retain for assistance. This usually adds up to roughly $1,500, and it needs to be paid before your case is filed.
The price of attending the required debt education and credit counseling courses is in addition to the filing fee and legal fees.