Can You File Bankruptcy Twice?

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on August 31, 2023

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What Is Bankruptcy?

Bankruptcy is a federal legal process intended to help individuals and businesses eliminate or repay their debts under the protection of bankruptcy courts.

It's a tool designed to provide financial relief to those who find themselves unable to meet their financial obligations.

The main purpose of bankruptcy is to allow individuals or businesses a chance to start anew by discharging their debts or creating a manageable payment plan. It is not a license for financial irresponsibility but a lifeline for those who are struggling.

Bankruptcy laws provide for the reduction, repayment, or elimination of certain debts, and can provide a timeline for the repayment of non-dischargeable debts over time.

You can file for bankruptcy twice; however, there are limits to how often you can receive a discharge.

Possibility of Filing for Bankruptcy Twice

In some cases, individuals might find themselves considering a second bankruptcy filing due to financial hardship. While it's indeed possible to file for bankruptcy more than once, certain rules and restrictions apply.

Time Restrictions for Filing a Second Bankruptcy

The bankruptcy code provides specific time limits between bankruptcy filings, which can vary depending on the chapter under which you're filing.

Chapter 7 to Chapter 7 Bankruptcy

After receiving a discharge in a Chapter 7 bankruptcy, you must wait eight years from the date of your previous filing to file another Chapter 7 case.

Chapter 13 to Chapter 13 Bankruptcy

If you wish to file a second Chapter 13 case after receiving a discharge in the first, you need to wait two years from the date of the previous filing.

Chapter 7 to Chapter 13 Bankruptcy

To file a Chapter 13 after receiving a Chapter 7 discharge, commonly referred to as "Chapter 20," you must wait four years from the date of the Chapter 7 filing.

Chapter 13 to Chapter 7 Bankruptcy

In case you plan to file a Chapter 7 case after receiving a Chapter 13 discharge, a six-year waiting period applies, with some exceptions.

The timetable is as follows:

  • Chapter 7 after Chapter 7: every 8 years

  • Chapter 7 after Chapter 13: after 6 years

  • Chapter 13 after Chapter 7: after 4 years

  • Chapter 13 after Chapter 13: every 2 years

Waiting Periods Between Bankruptcy Filings

How Bad Is It to File Bankruptcy Twice?

If you have waited the appropriate amount of time since your last bankruptcy, then the worst effect of filing twice will be the hit to your credit score.

Bankruptcy usually affects high scores more than already low scores, so you may need to investigate for yourself how your credit will be impacted.

Limitations and Consequences of Second Bankruptcy Filing

Filing for bankruptcy twice comes with certain limitations and consequences, which include the impact on the automatic stay, dischargeability of debts, credit consequences, and future eligibility for bankruptcy relief.

Impact on Automatic Stay

The automatic stay, a court order that temporarily halts creditors from collecting debts, has a limited duration if you file for bankruptcy again within one year.

Dischargeability of Debts

Not all debts are dischargeable in a second bankruptcy. For instance, if a debt was not discharged in a previous bankruptcy, you cannot discharge it in a subsequent bankruptcy case.

Credit Consequences and Rebuilding Credit

A second bankruptcy will have a more severe impact on your credit and can remain on your credit report for up to 10 years. Rebuilding credit after a second bankruptcy will require discipline, patience, and sound financial practices.

Future Eligibility for Bankruptcy Relief

Frequent bankruptcy filings can affect your eligibility for future relief. Some courts might deny a discharge if they find that the debtor has abused the bankruptcy process.

Alternatives to Filing for Bankruptcy Twice

Before deciding to file for bankruptcy a second time, it's important to explore other possible alternatives, which could be more beneficial in the long term.

Debt Management Plans

Debt management plans, facilitated by credit counseling agencies, can help you manage your debt by reducing interest rates and eliminating late fees.

Debt Consolidation

Debt consolidation involves taking out a new loan to pay off your current debts. This could help you manage your debts more effectively if you secure a lower interest rate or monthly payment.

Negotiating With Creditors

In some cases, creditors might be willing to negotiate the repayment terms of your debt. They may agree to reduce the overall amount of debt, lower the interest rate, or extend the repayment period.

Seeking Professional Financial Advice

Professional financial advisors can provide personalized advice on debt management based on your financial situation. They can help you devise a realistic budget, negotiate with creditors, and explore alternatives to bankruptcy.

Limitations and Alternatives to Filing for Bankruptcy Twice

Filing for Bankruptcy

The U.S. Bankruptcy Code provides for various types of bankruptcy, each suited to different circumstances and financial situations.

Chapter 7 Bankruptcy

Chapter 7, also known as "liquidation" bankruptcy, is designed to erase most types of unsecured debt. The trustee (the individual overseeing the bankruptcy) may sell certain property to repay creditors.

Means Test for Chapter 7 Bankruptcy

To qualify for Chapter 7, you must pass the "means test," which compares your income to the median in your state for a household of your size. If your income is too high, you may have to file under Chapter 13 instead.

Chapter 13 Bankruptcy

Chapter 13, or "wage earner's" bankruptcy, is aimed at individuals who earn regular income but struggle to pay their debts. It allows them to propose a plan to repay all or part of their debts over three to five years.

Income Requirements for Chapter 13 Bankruptcy

To be eligible for Chapter 13, you must have regular income and debts within certain limits set by the bankruptcy code.

Your proposed repayment plan must account for secured debts and priority unsecured debts like alimony, child support, and certain tax obligations.

Conclusion

It is possible to file for bankruptcy twice; however, there are restrictions and considerations to keep in mind. Additionally, frequent bankruptcy filings may impact your future eligibility for bankruptcy relief.

The U.S. Bankruptcy Code provides various bankruptcy options, such as Chapter 7 and Chapter 13, each with specific eligibility criteria. The time restrictions for filing a second bankruptcy depend on the chapter under which you previously filed.

It is crucial to be aware of the impact on debts, credit consequences, and limitations of a second bankruptcy filing. Your credit score will be affected, and the bankruptcy can remain on your credit report for up to 10 years.

Exploring alternatives, such as debt management plans, debt consolidation, negotiating with creditors, or seeking professional financial advice, may provide more beneficial long-term solutions.

Can You File Bankruptcy Twice? FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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