Life is full of financial challenges, and going through bankruptcy once and rebuilding is no guarantee that you won’t end up facing new financial issues in the future. A job loss, a medical emergency or problems with your business can all lead you down that road again.
There’s no shame in seeking financial relief through bankruptcy – even if you have to do it multiple times. In fact, this isn’t an unusual situation for people who have long-term health problems. Bankruptcy is, simply put, often the most responsible and strategic way you can address overwhelming debt.
How often can you file for bankruptcy?
The U.S. Bankruptcy Code imposes certain limitations on filing for bankruptcy multiple times, depending on the type of bankruptcy previously filed and the time that has elapsed. These limitations are in place to prevent abuse of the system and to encourage responsible financial behavior. The rules work like this:
- Chapter 7 after Chapter 7: If you filed for Chapter 7 bankruptcy in the past and received a discharge, you cannot file for Chapter 7 again until eight years have passed from the previous filing date.
- Chapter 13 after Chapter 13: If you filed for Chapter 13 bankruptcy in the past and received a discharge, you cannot file for Chapter 13 again until two years have passed from the previous filing date.
- Chapter 13 after Chapter 7: If you previously obtained a discharge in a Chapter 7 case, you must wait four years from the filing date of that case before filing for Chapter 13.
- Chapter 7 after Chapter 13: If you obtained a discharge in a Chapter 13 case, you must wait six years from the filing date of the previous case before filing for Chapter 7.
Generally speaking, the trustee is not going to hold multiple bankruptcies against you unless there are actual indications that you are abusing the bankruptcy process (such as having a previous bankruptcy dismissed with prejudice).
While it can be frustrating to find yourself in this financial position again, bankruptcy exists for a reason. Seeking legal assistance can help you better understand the best steps to take under the circumstances.