- There’s no limit on how many times you can file for bankruptcy, but there are strict rules about how often you can file.
- Waiting periods between bankruptcy filings depend on your filing date, type and result.
- There are pros and cons of combining Chapter 7 and Chapter 13 proceedings for what’s nicknamed a “Chapter 20” bankruptcy.
- Expense and harm to your credit report are two of the reasons to avoid multiple bankruptcy filings if you can.
President Trump was famously chided on the debate stage for his businesses declaring bankruptcy four times (it was actually six)—but what about the rest of us? How many times can you file for bankruptcy?
There is no limit on how many times you can file for bankruptcy, but there are rules about how often you can file, according to Becky House, a credit counselor-turned-director at American Financial Solutions (AFS), a national nonprofit.
The frequency of filing for bankruptcy also depends on whether you’re pursuing Chapter 7 or Chapter 13 proceedings (Trump filed for Chapter 11, which is specific to reorganizing businesses). Chapter 7 offers relief in the form of a debt discharge after using any assets to cover outstanding balances, while Chapter 13 sets you up with an affordable payment plan to end your debt within three to five years. Both can torpedo your credit, however, so these are not options to take lightly.
Presidents aside, let’s delve deeper into how often you can file for bankruptcy, and whether this extreme choice is even the right one.
Refresher on Chapter 7 vs. Chapter 13 bankruptcy
A bankruptcy lawyer can help you decide which type of bankruptcy is best for your situation, including by directing you toward a mandated, pre-filing course.
Meet the Expert
Becky House, a credit counselor-turned-director at American Financial Solutions (AFS), a national nonprofit.
So, how often can you file for bankruptcy?
While there’s no real limit to how many times you can enter bankruptcy proceedings, there are rules about how often you do so. These rules depend on a few factors. They include:
Your filing type (Chapter 7 versus Chapter 13)
The date you last filed for bankruptcy
The results of your most recent case (discharge or dismissal)
Your debt repayment status on a Chapter 13 discharge (more on that below)
If you receive a debt discharge via bankruptcy—that is, some or all of your debt is canceled—you would have to wait longer to file again (though having to file again would be something to avoid, if possible).
In the case of successful discharges, here is how long you would have to wait between bankruptcies:
|Between Chapter 13 discharges||2 years||Though the two-year timeline is possible, it’s unlikely since a Chapter 13 proceeding would result in a three-to-five-year repayment plan.|
|After a Chapter 7 and before a Chapter 13||4 years||Double-dipping on a Chapter 7 and Chapter 13 is referred to unofficially as “Chapter 20” bankruptcy (more on that below).|
|After a Chapter 13 and before a Chapter 7||6 years||The exception to the six-year requirement is if you followed your Chapter 13 repayment agreement to a “T.”|
|Between Chapter 7 discharges||8 years||When successful, Chapter 7 erases most types of debt, hence the longest waiting period to refile.|
Given these “wait times,” it could be wise to hold off on a bankruptcy filing if you foresee additional debt soon coming down the pike.
“These could be something like pending medical expenses,” says House. “If a person files for bankruptcy and does not include those debts, they will be unable to add them later on.”
What about a ‘Chapter 20’ bankruptcy?
Chapter 7 and Chapter 13 bankruptcy are sometimes combined for a so-called “Chapter 20” proceeding. Beware that this is not an overnight fix, though.
You might receive relief on most of your debt via a Chapter 7 discharge and then, four years later, pursue a Chapter 13 discharge to cancel other debt.
Still, the benefits could outweigh the four-year delay for some bankruptcy filers. If you weren’t able to discharge student loans or government-related payments, such as back taxes or child support, in Chapter 7, you might reorganize them onto an affordable repayment plan via Chapter 13.
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What if you didn’t receive a bankruptcy discharge?
If your bankruptcy case was dismissed before you could receive a discharge, you must wait 180 days to file again.[4,5] That’s a lot shorter than two to eight years, of course, but it’s worth questioning why you received a dismissal in the first place, as it could affect your odds of a discharge next time around.
Not following the court’s procedures are the most common reasons for an involuntary bankruptcy dismissal, according to House. A debtor’s case could be dismissed because they…
Missed a deadline
Didn’t pay a court fee
Forgot to submit a form
Failed to appear in court
Was a no-show at a meeting with their creditors
Didn’t disclose all of their assets
“If a case is dismissed, that means the creditors can now resume collection efforts; the bankruptcy ‘stay’ is lifted,” says House.
Seek out help to determine whether bankruptcy is your best option
Dealing with debt is always a challenge. And if you’re considering bankruptcy, you’ve probably already faced more than your fair share of challenges.
The best advice is to seek counsel before moving forward. Bankruptcy is complicated. It’s also expensive: There are hundreds of dollars in bankruptcy court fees to fend off, not to mention the potential cost of a bankruptcy lawyer (unless you find pro bono aid).
Bankruptcy also isn’t the “clean slate” some consumers dream it to be. As mentioned, it will be noted on your credit report for 7 to 10 years, dropping your credit score and making it harder to obtain low-interest borrowing options.
Be sure to have health and auto insurance policies in place after a bankruptcy. “These two insurances can help prevent some of the biggest, unexpected bills from being incurred in the future,” says Becky House, a credit counselor-turned-director at American Financial Solutions (AFS). They could also help to prevent another bankruptcy filing.
Still, bankruptcy exists as an option for a reason. So if you and your credit counselor, Certified Financial Planner or debt relief lawyer agree that it’s your best, last choice, go forward with your eyes open. And, hopefully, it’s a one-time solution.
Tip: House recommends having health and auto insurance policies in place after a bankruptcy. “These two insurances can help prevent some of the biggest, unexpected bills from being incurred in the future,” she says. They could also help to prevent another bankruptcy filing.