How Many Years Between Bankruptcy Filings?

Bankruptcy is a legal process designed to provide relief for individuals burdened by overwhelming debt, offering a path to either eliminate certain debts or reorganize them into a manageable repayment plan. While it can offer a fresh financial start, there are specific rules governing how often one can file for bankruptcy and, more importantly, how frequently one can receive a discharge of debts.

Eligibility for a New Chapter 7 Discharge

Receiving a discharge in a Chapter 7 bankruptcy allows for the elimination of most unsecured debts. However, if you have previously received a bankruptcy discharge, specific waiting periods apply before you can obtain another one. These waiting periods are calculated from the filing date of the previous bankruptcy case, not the discharge date.

If you previously received a Chapter 7 discharge, you must wait at least eight years from the filing date of that prior case before you can file for Chapter 7 again and receive another discharge. For instance, if a Chapter 7 case was filed on September 1, 2016, a new Chapter 7 case would be eligible for discharge on or after September 1, 2024. Filing a new Chapter 7 case before this eight-year period has elapsed means you will not be eligible for a discharge in the new case.

When a previous bankruptcy was a Chapter 13 that resulted in a discharge, the waiting period to receive a Chapter 7 discharge is generally six years from the Chapter 13 filing date. This means if a Chapter 13 was filed on August 1, 2016, and discharged three years later, eligibility for a Chapter 7 discharge would begin on August 1, 2022. This six-year waiting period, referenced in U.S. Bankruptcy Code Section 727, can be shorter under specific conditions.

There is no mandatory waiting period for a Chapter 7 discharge if 100% of the allowed claims were paid in the prior Chapter 13 bankruptcy. Additionally, the waiting period may be waived if at least 70% of the allowed unsecured claims were paid in the prior Chapter 13 case, and the Chapter 13 plan was proposed in good faith and represented the debtor’s best effort to repay creditors. These exceptions are designed to encourage debtors to fulfill their repayment obligations.

Eligibility for a New Chapter 13 Discharge

Chapter 13 bankruptcy involves a repayment plan, allowing individuals with regular income to manage their debts while potentially keeping their assets. The discharge in Chapter 13 occurs after the successful completion of this repayment plan. Specific waiting periods apply if you have previously received a bankruptcy discharge and are seeking a new Chapter 13 discharge.

If your previous bankruptcy was a Chapter 7 that resulted in a discharge, you must wait four years from the filing date of that prior Chapter 7 case to be eligible for a Chapter 13 discharge. For example, if a Chapter 7 was filed on September 1, 2016, eligibility for a Chapter 13 discharge would begin any time after September 1, 2020.

When a prior Chapter 13 case resulted in a discharge, the waiting period to receive another Chapter 13 discharge is two years from the filing date of the previous Chapter 13 case. This two-year period is calculated from the date you filed the previous Chapter 13, not the date your repayment plan was completed or the discharge was granted.

The eligibility for a Chapter 13 discharge also requires the debtor to have completed an approved course in financial management. Additionally, all domestic support obligations that were due prior to certification must have been paid.

Filing a New Case Without Discharge Eligibility

While there are strict waiting periods to receive a discharge in a subsequent bankruptcy case, it is possible to file a new bankruptcy case even if you are not eligible for a discharge. The Bankruptcy Code does not limit the number of times a person can file for bankruptcy, but it does restrict the time period between discharges. If a previous case was dismissed without a discharge, the statutory waiting periods for discharge generally do not apply for a new filing.

The primary purpose of filing a new case when a discharge cannot be obtained is often to gain the protection of the automatic stay. This legal provision temporarily halts most collection actions by creditors, including lawsuits, wage garnishments, and foreclosures, providing a debtor with a temporary reprieve. However, if a case is filed too soon after a previous dismissal, the automatic stay may be limited or unavailable.

It is important to understand that filing a bankruptcy case without discharge eligibility means the debts will not be legally wiped out. Filing prematurely can result in the case being dismissed, leading to wasted time, court fees, and attorney costs, and potentially leaving the debtor in a more difficult financial position.