How often can you file bankruptcy?

Most people don’t want to file bankruptcy even once, let alone twice or thrice. But there are financial reasons why it may be necessary at times. There are limitations to how frequently a consumer can file, though. Let’s take a look at what those limitations are and how they can affect a current or future bankruptcy.

When is it not allowed to file for bankruptcy protection?

If you are in debt and unable to pay the amounts you owe, it’s almost always possible to file for bankruptcy. Whether that is the best debt relief option available to you is another matter entirely. And you may not qualify for Chapter 7 bankruptcy protection, which allows for all of your debts to be discharged. You’ll likely be able to file Chapter 13 or Chapter 11 bankruptcy, however, though these options aren’t as effective as Chapter 7.

Related articles:
Bankruptcy: The differences between Chapter 7 & Chapter 13
Bankruptcy: The differences between Chapter 7 & Chapter 11

All of this changes, however, if you’ve filed for bankruptcy in the past. Here’s how it works:

• Chapter 7 to Chapter 7: If your debts already were discharged under Chapter 7 you cannot file Chapter 7 again for eight years from your previous filing date.  
• Chapter 13 to Chapter 13: If you previously filed Chapter 13, you cannot file for subsequent Chapter 13 protection until at least two years after the first case was filed.
• Chapter 7 to Chapter 13: If your debts were previously discharged under Chapter 7 protection, you cannot file a subsequent Chapter 13 bankruptcy for at least four years from your Chapter 7 filing date.
• Chapter 13 to Chapter 7: If you filed for Chapter 13 protection, you typically cannot file a subsequent Chapter 7 bankruptcy until at least six years from the date you filed Chapter 13. However, if during your Chapter 13 payment plan your finances change dramatically, you may be able to have your remaining debt discharged as long as you have paid back at least 70% of your unsecured debts under your Chapter 13 plan.

“The majority of Chapter 13 filings, are not completed to discharge,” says Michael Bovee co-founder of Resolve. “The reason so many Chapter 13s are dismissed is because further financial setbacks can occur. When the bankruptcy trustee requires much of your disposable income in order to distribute to your creditors, even a small cash emergency can cause you to miss a payment. That missed payment often means your bankruptcy will be dismissed.”

How to avoid filing bankruptcy more than once

As we pointed out initially, most people want to avoid filing for bankruptcy entirely. Fortunately, there are other debt relief options available, such as debt settlement and debt management, that are worth considering, especially if you don’t qualify for Chapter 7 bankruptcy.

Related article: Credit counseling vs. Chapter 13 bankruptcy: Which is right for you?

If you must file and are required to pay back some of your debt under a payment plan, you’ll want to be certain you will have reliable income for the duration of your payment plan (usually three to five years) and that the monthly payments are manageable.