How Often Can You File Bankruptcy?

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Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on April 24, 2023

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How Often Can You File Bankruptcy?

You can file for bankruptcy as often as you like; however, there are limits to how often you can receive a discharge.

The timetable is as follows:

Chapter 7 after Chapter 7: every 8 years

Chapter 7 after Chapter 13: after 6 years

Chapter 13 after Chapter 7: after 4 years

Chapter 13 after Chapter 13: every 2 years

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common form of bankruptcy for individuals. It is also known as liquidation bankruptcy, as it involves selling non-exempt assets to repay creditors.

The process typically takes 4-6 months to complete, and it allows individuals to discharge most of their unsecured debts.

Eligibility Requirements

To be eligible for Chapter 7 bankruptcy, individuals must meet certain criteria. Firstly, they must pass the means test, which compares their income to the median income in their state. If their income is lower than the median, they are eligible for Chapter 7 bankruptcy.

If their income is higher than the median, they may still be eligible if they pass the second part of the means test, which considers their expenses and other factors.

Additionally, individuals must have completed credit counseling within 180 days before filing for bankruptcy. They must also have not received a discharge in a Chapter 7 bankruptcy case within the past 8 years, or a Chapter 13 bankruptcy case within the past 6 years.

Timeframe for Filing

There are no restrictions on how often individuals can file for Chapter 7 bankruptcy, but there are timeframes that must be met to file Chapter 7 bankruptcy. Individuals must wait 8 years from the date of their previous Chapter 7 discharge before they can file for Chapter 7 bankruptcy again.

If they have filed for Chapter 13 bankruptcy previously, they must wait 4 years from the date of their Chapter 13 discharge before they can file for Chapter 7 bankruptcy.

Frequency of Filing

While there are no restrictions on how often individuals can file for Chapter 7 bankruptcy, it is important to note that filing for bankruptcy can have long-lasting consequences on credit score, employment opportunities, and future borrowing.

As such, it is generally recommended to only file for bankruptcy when all other options have been exhausted.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a reorganization bankruptcy for individuals who have a regular income but are unable to repay their debts. It allows individuals to create a repayment plan to pay off their debts over a period of 3-5 years.

Chapter 13 bankruptcy is often used by individuals who are behind on mortgage or car payments and want to keep their assets.

Eligibility Requirements

Individuals must have a regular income that is sufficient to pay their living expenses and their debt repayments under the repayment plan.

Additionally, their debts must be within the limits set by the bankruptcy code, which is currently an individual's combined total secured and unsecured debts are less than $2,750,000 as of the date of filing for bankruptcy relief.

Individuals must have also completed credit counseling within 180 days before filing for bankruptcy. They must also have not received a discharge in a Chapter 7 bankruptcy case within the past 4 years, or a Chapter 13 bankruptcy case within the past 2 years.

Timeframe for Filing

There are restrictions on how often individuals can file for Chapter 13 bankruptcy. Individuals can file for Chapter 13 bankruptcy once every 2 years from the date of their previous filing.

However, if their previous filing was dismissed due to a failure to comply with court orders or due to their own misconduct, they may have to wait 180 days before filing again.

Frequency of Filing

Similar to Chapter 7 bankruptcy, there are no restrictions on how often individuals can file for Chapter 13 bankruptcy.

However, filing for bankruptcy can have long-lasting consequences, and it is important to consider alternatives to bankruptcy and to seek professional advice before making a decision.

How Often Can You File Bankruptcy?

Comparison of Chapter 7 and Chapter 13 Bankruptcy

Similarities

Both Chapter 7 and Chapter 13 bankruptcy provide relief from debt collectors and allow individuals to discharge or restructure their debts.

Additionally, both types of bankruptcy have automatic stays, which stop wage garnishments, foreclosures, and other collection actions while the bankruptcy case is pending.

Differences

The main difference between Chapter 7 and Chapter 13 bankruptcy is the way in which debts are handled.

Chapter 7 bankruptcy involves liquidating non-exempt assets to repay creditors, while Chapter 13 bankruptcy involves creating a repayment plan to pay off debts over a period of 3-5 years.

Additionally, eligibility requirements for Chapter 7 and Chapter 13 bankruptcy differ.

While Chapter 7 bankruptcy is available to individuals with low incomes and limited assets, Chapter 13 bankruptcy is only available to individuals with a regular income who can afford to make debt repayments under the repayment plan.

Factors to Consider When Choosing Between Chapter 7 and 13

When choosing between Chapter 7 and Chapter 13 bankruptcy, individuals should consider their income, assets, and debt types.

If an individual has a low income and few assets, Chapter 7 bankruptcy may be a better option.

However, if an individual has a regular income and wants to keep their assets, Chapter 13 bankruptcy may be a better option.

Alternatives to Bankruptcy

While bankruptcy can provide relief from debt collectors, it is not always the best option. There are several alternatives to bankruptcy that individuals can consider, including debt consolidation, credit counseling, and debt settlement.

Debt consolidation involves combining multiple debts into a single loan with a lower interest rate. This can make debt repayment more manageable and can potentially lower monthly payments.

Credit counseling involves working with a credit counselor to create a budget and a debt repayment plan.

Debt settlement involves negotiating with creditors to settle debts for less than the full amount owed.

Pros and Cons of Each Option

Pros and Cons of Alternatives to Bankruptcy

Debt consolidation can make debt repayment more manageable and can potentially lower monthly payments, but it may not be available to individuals with low credit scores or high debt-to-income ratios.

Credit counseling can help individuals create a budget and a debt repayment plan, but it may not be able to negotiate lower interest rates or settle debts for less than the full amount owed.

Debt settlement can potentially reduce the amount owed on debts, but it can also have negative impacts on credit scores and may result in taxes on forgiven debt.

Repercussions of Filing Bankruptcy

Filing for bankruptcy can have long-lasting consequences on credit scores, employment opportunities, and future borrowing.

Bankruptcy can remain on credit reports for up to 10 years, and it can make it difficult to obtain credit, rent an apartment, or find employment in certain industries.

Impact on Credit Score

Filing for bankruptcy can have a negative impact on credit scores, which can make it difficult to obtain credit or obtain credit at favorable rates. Bankruptcy can remain on credit reports for up to 10 years, and it can lower credit scores by up to 200 points or more.

Effects on Employment Opportunities

Filing for bankruptcy can also have an impact on employment opportunities, particularly in industries that require security clearance or fiduciary responsibilities.

Employers may view bankruptcy as a sign of financial irresponsibility, which may affect an individual's chances of obtaining a job.

Effects on Future Borrowing

Filing for bankruptcy can make it difficult to obtain credit or obtain credit at favorable rates. Lenders may view individuals who have filed for bankruptcy as high-risk borrowers, and they may require higher interest rates or additional collateral to approve a loan.

How Often Bankruptcy Appears on Credit Report

Bankruptcy can remain on credit reports for up to 10 years, depending on the type of bankruptcy filed. Chapter 7 bankruptcy remains on credit reports for 10 years from the date of filing, while Chapter 13 bankruptcy remains on credit reports for 7 years from the date of filing.

Conclusion

Filing for bankruptcy can provide relief from debt collectors and allow individuals to discharge or restructure their debts.

However, it is important to understand how often you can file for bankruptcy and to consider alternatives to bankruptcy before making a decision.

Bankruptcy can have long-lasting consequences on credit scores, employment opportunities, and future borrowing, and it is important to seek professional advice before making a decision.

How Often Can You File Bankruptcy? FAQs

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About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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