How Many Bankruptcies Can You File in a Lifetime?

Navigating significant financial challenges can sometimes lead individuals to consider bankruptcy as a legal avenue for debt relief. A common question arises regarding the ability to file for bankruptcy more than once. While there is no strict lifetime limit on the total number of bankruptcy filings an individual can initiate, specific legal restrictions and mandatory waiting periods significantly impact the ability to receive a discharge of debts in subsequent cases. These rules are designed to prevent abuse of the bankruptcy system and ensure it serves its intended purpose of providing a fresh start under appropriate circumstances. Understanding these regulations is important for anyone considering a repeat filing to address persistent financial distress.

Understanding Bankruptcy Types and Discharge

Bankruptcy law provides individuals with different options to manage overwhelming debt, primarily through Chapter 7 and Chapter 13. Chapter 7, often referred to as liquidation bankruptcy, involves a trustee selling a debtor’s non-exempt assets, if any, to repay creditors, with remaining eligible debts typically being discharged. This process is generally faster, often concluding within a few months. Chapter 13, known as reorganization or repayment plan bankruptcy, allows individuals with regular income to propose a plan to repay all or a portion of their debts over a period, typically three to five years. Debtors usually retain their assets in Chapter 13, making it an option for those who wish to protect specific property, such as a home.

A central concept in bankruptcy is the “discharge,” which is a court order that legally releases a debtor from personal liability for certain debts. Once a debt is discharged, creditors are prohibited from attempting to collect it, providing the debtor with a financial fresh start. The ability to receive this discharge is the primary focus when considering repeat bankruptcy filings, as strict rules govern how often a discharge can be granted. Not all debts are dischargeable; common exceptions include most student loans, certain taxes, and child support or alimony obligations.

Waiting Periods for Chapter 7 Discharge

Specific waiting periods apply before an individual can receive a discharge in a Chapter 7 bankruptcy if they have previously filed for bankruptcy. If a debtor previously received a discharge under Chapter 7, they must generally wait eight years from the filing date of the first Chapter 7 case to receive another Chapter 7 discharge. Filing a new Chapter 7 case before this eight-year period has passed means the debtor will likely not be eligible for a discharge of their debts in the new case. This timeframe is calculated from the filing date of the initial case, not the discharge date.

Different rules apply when seeking a Chapter 7 discharge after a previous Chapter 13 filing. Generally, a debtor must wait six years from the filing date of a prior Chapter 13 case to receive a Chapter 7 discharge. However, there are exceptions to this six-year waiting period. An individual may be able to file for Chapter 7 sooner if they paid back a significant portion of their unsecured debts in the previous Chapter 13 plan.

Specifically, if the previous Chapter 13 plan paid 100% of the unsecured claims, or at least 70% of such claims, and the plan was proposed in good faith with the debtor’s best effort, the six-year waiting period may be reduced or eliminated. The purpose of these waiting periods is to regulate the frequency with which individuals can use the bankruptcy system to eliminate debts, promoting responsible financial behavior. Attempting to file for Chapter 7 before the waiting period expires can result in the case being dismissed and the loss of associated legal protections.

Waiting Periods for Chapter 13 Discharge

Similar to Chapter 7, specific waiting periods are in place for individuals seeking a discharge in a Chapter 13 bankruptcy after a previous bankruptcy filing. If a debtor previously received a discharge under Chapter 7, they must typically wait four years from the filing date of the Chapter 7 case before becoming eligible for a Chapter 13 discharge. This period allows for a period of financial re-stabilization following the liquidation process. The four-year calculation begins from the original filing date, not the date the Chapter 7 discharge was granted.

When an individual has previously filed for Chapter 13 bankruptcy and received a discharge, the waiting period to receive another Chapter 13 discharge is generally two years. This two-year period is measured from the filing date of the previous Chapter 13 case. This distinction is important because Chapter 13 plans typically last three to five years, meaning eligibility for a new filing might arise immediately after the previous plan concludes.

These waiting periods are important because filing too soon can lead to adverse outcomes, such as the dismissal of the new bankruptcy case without a discharge. A dismissal means the debtor remains responsible for their debts and loses the financial protections bankruptcy offers, including the automatic stay against collection efforts. Therefore, understanding and adhering to these timeframes is important for individuals planning to seek debt relief through a subsequent Chapter 13 filing.

Eligibility Considerations for Repeat Filings

Beyond the specific waiting periods for discharge, several other legal requirements and bars can influence an individual’s ability to file for bankruptcy again and receive a discharge. One such provision is the 180-day bar, which prevents a debtor from refiling for bankruptcy within 180 days under certain circumstances. This bar typically applies if a previous bankruptcy case was dismissed by the court due to the debtor’s willful failure to appear or comply with court orders. It also applies if the debtor voluntarily dismissed their case after a creditor had filed a motion to lift the automatic stay, a protection that temporarily stops collection actions. The purpose of this rule is to deter individuals from abusing the bankruptcy process.

All individual bankruptcy filers, including those making repeat filings, must complete pre-filing credit counseling and post-filing debtor education courses as a condition for discharge. The credit counseling session must be completed within 180 days before filing the bankruptcy petition and aims to assess the debtor’s financial situation and explore alternatives to bankruptcy. The debtor education course, focusing on personal financial management, must be completed after filing the petition but before the discharge is granted. These courses are designed to help debtors manage their finances more effectively and avoid future financial distress.

For individuals considering a repeat Chapter 7 filing, passing the means test remains a requirement. This test evaluates a debtor’s income and expenses to determine if they have sufficient disposable income to repay their debts through a Chapter 13 plan. Even in a subsequent filing, the debtor must demonstrate that their income falls below the state median or that their disposable income is insufficient to make meaningful payments to creditors. The means test serves to ensure that Chapter 7 is available primarily to those who genuinely lack the ability to repay their debts.

Finally, all bankruptcy filings, including repeat cases, are subject to a general requirement of good faith. While “good faith” is not explicitly defined in the Bankruptcy Code, courts consider the totality of circumstances to determine if the debtor’s petition and proposed plan are fair and not an abuse of the system. Factors considered may include the debtor’s financial condition, their motives for filing, and whether the filing genuinely seeks to achieve the purposes of bankruptcy law. A lack of good faith can lead to the dismissal of the bankruptcy case.