For some people, filing for bankruptcy is a one-in-a-lifetime event. It helps them straighten out their finances and get back on track and they never have to worry about things again. For many others, though, this is not the case.
The last few years have shown that getting into a precarious financial situation can be easier than we might assume. It only takes one major setback, one medical emergency, or one unforeseen global pandemic to completely ruin a family’s finances.
This has led many people who have previously filed for bankruptcy to wonder if they should go down that road again. Consequently, many of these same people have been wondering if that is even an option for them.
Can you file for bankruptcy more than once? How often can you file bankruptcy? These are questions that do not have a simple, straightforward answer – but which are important to understand answers to if you are considering a second or consecutive filing.
Can You File Bankruptcy More Than Once?
Yes, you can absolutely file for bankruptcy more than once in your lifetime. You may have seen news articles about companies that have filed for bankruptcy multiple times, and the same thing applies to an individual filing for personal bankruptcy.
In bankruptcy law, there is typically a minimum amount of time between the discharge or end of one bankruptcy and when you are permitted to file for another. The chapter of bankruptcy also matters. The answer to whether filing for a second, third or even consecutive bankruptcy within your lifetime is legal, though, is a resounding yes!
How Often Can You File Bankruptcy?
Since you can file for bankruptcy more than once if necessary, you might now be wondering: how often can you file bankruptcy? The answer can be confusing and frustrating, but there is an answer to be had.
The simplest explanation is that the frequency with which you can file for bankruptcy depends on the bankruptcy chapters in question.
If you previously filed for and received a Chapter 13 bankruptcy, you will need to wait a minimum of two years before filing for a new Chapter 13 bankruptcy. Remember, this minimum period begins after the last bankruptcy ended – not from the filing date of the first bankruptcy.
If your previous bankruptcy was a Chapter 13 and you are looking to file for a Chapter 7, things get a little more complicated. In this instance, you will have to wait a minimum of six years between bankruptcies, unless all the terms of your previous bankruptcy were met and all outstanding debt from that specific agreement is paid. In that circumstance, there is no minimum waiting period.
What if your last bankruptcy was a Chapter 7 bankruptcy? Again, your wait time will depend on the chapter you are filing for this time.
If you are filing for another Chapter 7 or a Chapter 11 bankruptcy, you will have to wait a minimum of eight years from your discharge date before filing. If you are filing for a Chapter 13 bankruptcy, though, you will have your wait time cut in half – or four years from the date of discharge – before you can file again.
Most people do not foresee filing for bankruptcy again after their first one. However, there are some instances in which this might be the most practical decision.
Double-Filing – “Chapter 20” Bankruptcy
There is an instance in which some consumers choose to file one type of bankruptcy right after another. Informally known as “Chapter 20” bankruptcy, this process involves filing for Chapter 13 bankruptcy after your Chapter 7 discharge is obtained.
If you have read the United States bankruptcy code, you may notice that there is no ‘Chapter 20” included. This is because the use of this name is simply a reference to the addition of Chapter 13 and Chapter 7 – adding up to a “Chapter 20” bankruptcy.
Why would someone do this? As with most things related to bankruptcy, there are pros and cons to choosing this complicated process – and it should not be done without careful consideration.
In theory, you could wipe out more debt by combining Chapter 7 and Chapter 13 bankruptcy this way than you could with either chapter alone. With the combination approach, you could also possibly work toward discharging your unsecured debt, then arrange to pay down some of your remaining secured and unsecured debt. The combination approach could also allow you more time to work toward paying down those debts you are able to repay.
However, there are downsides to combining two chapters of bankruptcy this way. You cannot actually file for Chapter 13 bankruptcy directly after being discharged from Chapter 7. Instead, you will have to wait a minimum of four years. You will also have to prove to the court that you are acting in good faith. Additionally, some debts will still not be discharged, such as alimony, child support, etc.
With scenarios like the so-called “Chapter 20” bankruptcy, it is easy to see how the question of “how often can you file bankruptcy?” becomes a complicated one. These kinds of step-by-step procedures are not common, since they can drag the process out far longer than most people are willing to commit. Still, they may be the best decision for some people – but who are those people, and are you one of them?
Thankfully, South Florida families like yours do not have to deal with the complicated decisions of bankruptcy alone.
Whether you decide to file bankruptcy for a second time, a third time, or combine two bankruptcies in a complex scenario, Van Horn Law Group can help guide your steps. The bankruptcy process is complicated no matter how many times you’ve done it.
This article originally appeared here and was republished with permission.