How Often Can You File Bankruptcy?
There is actually no limit on the number of times you can file for bankruptcy in Texas. However, there is a limit on the number of times the courts will discharge your debts. Most of the time, the only reason people file for bankruptcy is to have their debts discharged, but that isn’t always the case.
Perhaps a better question than how many times can you file bankruptcy would be, “How long must I wait in between bankruptcy filings?” The answer is it depends on the type of bankruptcy that you filed previously and the bankruptcy filing you intend to file now:
How Often Can You File Chapter 7 Bankruptcy?
Multiple Chapter 7 bankruptcies – Under Title 11 Section §727 of the U.S. Bankruptcy Code, you must wait eight years from the day the first Chapter 7 bankruptcy was filed to file another bankruptcy case under Chapter 7 and receive a bankruptcy discharge.
How Often Can You File Chapter 13 Bankruptcy?
Multiple Chapter 13 bankruptcies – Under Title 11 Section §1328 of the U.S. Bankruptcy Code, you have to wait at least two years from the day your last Chapter 13 was filed before you can file and receive a discharge for a subsequent Chapter 13 case.
Filing Bankruptcy Cases Under Different Chapters
If you’re filing under a different chapter the second time around, the following rules apply:
- Chapter 7 after Chapter 13 – According to Title 11 Section §727 of the U.S. Bankruptcy Code, if your first filing was under Chapter 13, you will not be granted a discharge under a Chapter 7 until at least six years has passed from the date you filed your Chapter 13.
- Chapter 13 after Chapter 7 – According to Title 11 Section §1328 of the U.S. Bankruptcy Code, if your first case was a Chapter 7, you only have to wait four years before filing a Chapter 13.
Filing for Bankruptcy for Reasons other than Discharge
Keep in mind that the time limits discussed only pertain to discharges, not to filings. There is no limit to amount of times you can actually file. While seeking a discharge of debts is the most common reason to file for bankruptcy, it’s not the only reason.
Some file for the automatic stay which prevents creditors from collecting on debts. Depending on your circumstances, this could help you stop collection efforts and catch up on your payments. A classic example would be to file for bankruptcy to stop a foreclosure on your house. Even if you do not get a discharge in the case, you may be able to catch up on the secured debt of your home so you can keep it.
Running into Difficulties with Repeat Bankruptcy Filings
There may be no legal limit on how many times you can file for bankruptcy in Texas but the courts will take a good look at why the debtor is filing for a subsequent bankruptcy. First, let’s review why bankruptcies were written into American law.
The U.S. Courts explain: “A fundamental goal of the federal bankruptcy laws enacted by Congress is to give debtors a financial ‘fresh start’ from burdensome debts. The Supreme Court made this point about the purpose of the bankruptcy law in a 1934 decision: ‘[I]t gives to the honest but unfortunate debtor … a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.’”
If you have filed for bankruptcy multiple times, the courts will have a greater degree of scrutiny when assessing the situation. Let’s go over some scenarios where filing bankruptcy twice or more may be rejected by the bankruptcy court.
There are certain situations where you won’t be eligible to file a second bankruptcy case. These conditions occur when a prior claim has been dismissed and is relevant for 180 days after the dismissed filing. If one or more of the following happened during your previous dismissed case, you won’t be eligible to file another one within 180 days:
- You disobeyed court orders
- You didn’t show up for your court appearance
- You obtained a voluntary dismissal of the case
When Does Multiple Bankruptcy Filings Become Abusive?
The bankruptcy law in the US was created specifically to help debtors and give them a fresh start from their debts. This is meant to be a way to help people. Unfortunately, some individuals would abuse this right by filing multiple bankruptcies simply to get out of continued debt. However, in these cases, they don’t demonstrate good faith when repaying debts, nor do they make any efforts to manage their debts better in the future.
This is why the courts have started to scrutinize subsequent bankruptcy filings more closely. This also means that it becomes more difficult to have your debts discharged in follow-up claims unless you can demonstrate why this is necessary and provide compelling reasons for the additional cases.
How Does Each Type of Bankruptcy Differ?
There are a few different types of bankruptcy options you can consider. Within this article, we’ll be focusing on the two main types of personal bankruptcy: Chapter 7 and 13.
Other types of bankruptcy include Chapter 9, 11, 12 and 15. However, these filings aren’t suited to individuals and focus on municipalities, businesses, family farmers, fishermen, or cases involving more than one country.
Chapter 7 Bankruptcy
If you want to eliminate your secured and unsecured debt without paying any of it back, then bankruptcy Chapter 7 is a good option. This is ideal for settling things like credit card debt. The benefit of filing under Chapter 7 is that you get a fresh start. If discharged, you won’t have any obligation apart from secured assets for which you sign a ‘Reaffirmation Agreement.’ Also, any wages you earn or property you acquire after the process is generally yours and not the creditor or bankruptcy court. There is no minimum debt amount required to file under Chapter 7, and the process can take between three to six months to be completed.
However, it’s important to note that you could lose your non-exempt property when filing under Chapter 7. Also, if you’re in the position of foreclosing on your home, filing under Chapter 7 only provides a temporary defense but doesn’t protect against foreclosure. Another consideration is that co-signers might get stuck with your debt.
Chapter 13 Bankruptcy
If you need to file for bankruptcy but want to keep your property at the end of the process, then a Chapter 13 filing is the best option. Unsecured and secured debts are not canceled when you file under Chapter 13 like they are under Chapter 7. However, the payments are reduced significantly in a repayment plan. A Chapter 13 filing protects any co-signers or co-debtors from creditors’ efforts. You’ll also be given more time to settle debts that cannot be discharged. These include things like back child support and taxes.
Filing under bankruptcy code 13 has numerous benefits, especially if you want to protect your property. However, there are also a few drawbacks to be aware of when filing under code 13. For one, the legal fees are higher than when filing under Chapter 7, and the process is more complex. Also, your repayment plan will be extended, and for the duration of the plan, you’ll be involved in the bankruptcy court process. This can last between three to five years.
Filing for Bankruptcy Multiple Times
In summary, it is possible to file multiple bankruptcies if you take the waiting periods and limitations into account. However, it might not be the wisest decision to file more than once if other alternatives are available to help manage your debt. If you’re uncertain whether a second (or third) bankruptcy filing is the right option, contact a bankruptcy attorney to discuss your options.
Discuss Your Options with an Experienced Bankruptcy Attorney
For questions regarding the bankruptcy process and how the laws pertain to your situation, contact our law office for legal advice. We provide bankruptcy relief services to clients in Dallas County, Collin County, and surrounding areas. If you are being sued for collection of unsecured debt and you are not interested in declaring bankruptcy, Warren & Migliaccio also provides debt relief services for the entire state of Texas.