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Can You File Bankruptcy More than Once?

7 min read
Francesca Toledo, J.D.

by Francesca Toledo, J.D.

Bankruptcy can be an intimidating process, but its benefits can lead to financial freedom. In many cases, individuals face financial trouble more than once in their lives, resulting in a need for multiple bankruptcies.

You may file for bankruptcy as many times as you need in your lifetime. There are, however, restrictions on how often you can file.

If you’re considering filing for bankruptcy, an attorney can be your best ally. Consider hiring an unbundled lawyer for cost-effective assistance. We can connect you with an unbundled bankruptcy attorney in your area today.

What is Bankruptcy?

Many individuals turn to bankruptcy ‌to achieve financial freedom.

Bankruptcy is a legal process that allows you to either eliminate or repay your debts. Depending on the chapter of bankruptcy you file, you may be eligible to discharge certain unsecured debts, liquidate your assets to help repay debts, or create a repayment plan to give you more time to pay off your debts.

In short, you can file for bankruptcy as many times as you need to. However, there are certain restrictions on how often you can file for bankruptcy. 

There are six chapters of bankruptcy: Chapter 7, Chapter 9, Chapter 11, Chapter 12, Chapter 13, and Chapter 15. Depending on the type of bankruptcy, you’ll need to wait varying amounts of time before you can file again.

How Does Bankruptcy Work?

The bankruptcy process can look different for everyone, as it depends on the situation and chapter filed. 

The three most common types of bankruptcy are Chapter 7, Chapter 11, and Chapter 13. Chapter 11 is almost always used by businesses, including corporations, partnerships, and LLCs. Consumers usually file under Chapter 7 or Chapter 13, depending on their situation. 

Chapter 7 Bankruptcy

Individuals most commonly file Chapter 7 bankruptcy. In Chapter 7, you can discharge unsecured debts, including credit cards, store cards, and medical bills. Secured debts are usually not eligible for discharge.

The court will also determine whether you have assets available that may help you repay your debts. If you do, they can order their liquidation and put the proceeds towards repayment.

You’ll first have to qualify to file for Chapter 7. If your gross family income is low enough, you’ll automatically qualify for Chapter 7. However, if your income is reasonable, you’ll have to subtract your monthly expenses from your income to determine whether you’d have enough left over to pay your creditors. If you’re not financially able to pay your debts, you’ll also be eligible to file for Chapter 7. 

To begin the Chapter 7 process, you file a petition with the court with supporting documents, including details regarding income, your debts, and exemptions. 

One of the biggest benefits of Chapter 7 is the automatic stay. Once you file for bankruptcy, an automatic stay is in place for your creditors. This means your creditors may no longer communicate with you and must stop all collection efforts.

When you file for Chapter 7 bankruptcy, they will assign a bankruptcy trustee to your case. This individual will oversee your case, determining what creditors get paid, which debts can be discharged, and what property you must liquidate for debt repayment. 

You’ll have to attend a special hearing, called a 341 meeting, where you’ll meet with your trustee and they’ll ‌ask you questions.

Property is one of the biggest issues in a Chapter 7 bankruptcy. While you may ‌keep much of your property and assets, including your vehicle or home, it is up to the trustee to decide what happens to property not protected by an exemption.

Chapter 7 is a relatively quick process, usually taking four to six months to resolve. Your Chapter 7 bankruptcy remains on your credit for up to ten years after the filing date.

Chapter 13 Bankruptcy

Chapter 13 is the second most common type of bankruptcy for consumers. 

In a Chapter 13 bankruptcy, you won’t have to worry about liquidating any assets to repay your debts. However, you’re also not likely to get any debts discharged, and you’ll remain responsible for remaining payments. 

Chapter 13 bankruptcy is often referred to as the wage earner’s plan. Often, those filing under this chapter make too much to qualify for Chapter 7. 

When you file for Chapter 13, you’ll have to create a repayment plan to pay back your debts and submit it to the bankruptcy court for approval. Repayment plans typically take three to five years to complete.

The Chapter 13 bankruptcy process regularly requires the following items:

  • Credit counseling: In the 180 days before filing for Chapter 13 bankruptcy, you must take a mandatory credit counseling course. 
  • Filing your Chapter 13 paperwork with the court: You must file all required paperwork to start your Chapter 13 bankruptcy. Soon after, you’ll receive information regarding your trustee, your 341 meeting, and confirmation of the automatic stay. 
  • 341 meeting: Similar to a Chapter 7 bankruptcy, you’re required to attend a 341 meeting with your trustee.
  • Beginning the repayment process: Whether the court has approved your repayment plan or not, you’ll start making payments within a month after filing your bankruptcy. 
  • Confirmation: Your creditors may object to your repayment plan. If there are no objections, and the judge finds your plan fair and feasible, you’ll receive formal approval. 
  • Completion: Before you receive your discharge, you must take a debtor’s education course and complete all payments. Once you’ve taken all the ‌steps, your Chapter 13 bankruptcy will be over.

Chapter 13 bankruptcy can require much more time to resolve because of the three-to-five-year plan. The bankruptcy usually stays on your credit for up to seven years after filing. 

How Long Do You Have to Wait Between Bankruptcy Filings?

The ‌time you must wait between bankruptcy filings depends on the chapter you’ve filed in the past and the chapter you wish to file now.

Generally, the timeline looks like this:

  • If you previously filed Chapter 7 and want to file another Chapter 7: 8 years
  • If you previously filed Chapter 7 and want to file Chapter 13: 4 years
  • If you previously filed Chapter 13 and want to file another Chapter 13: 2 years
  • If you previously filed Chapter 13 and want to file Chapter 7: 6 years (but no wait time if requirements of previous Chapter 13 were met)

It’s worth noting the time starts ticking on the date of the filing, not the date of discharge. 

Do Multiple Bankruptcies Affect Your Credit?

Bankruptcy always shows up on your credit report. Having multiple bankruptcies often means having more than one bankruptcy reported on your credit report at the same time.

While you can rebuild credit after a bankruptcy, having multiple bankruptcies on your report at the same time can have a greater negative impact. It could take more time to raise your score, and it may be more difficult to get credit cards or loans.

Your credit score takes a hit every time you file for bankruptcy. On average, most people see a 150-240 point drop in their credit score every time they file.

It’s not impossible to improve your credit health after bankruptcy, but it is worth thinking about when considering whether bankruptcy is best for you and your financial situation. 

A Bankruptcy Attorney Can Provide Valuable Guidance

Bankruptcy can leave you with several questions and concerns. A bankruptcy attorney can help ease your mind and get you on the right path.

A bankruptcy lawyer has the knowledge, experience, and resources to help you tackle every aspect of your bankruptcy case, including the following:

  • Deciding the chapter of bankruptcy that’s right for you
  • Determining whether any exemptions could benefit your case
  • Filing paperwork with the bankruptcy court
  • Representing you at your hearing
  • Handling any hurdles along the way

You don’t have to take on your bankruptcy case on your own. Count on a bankruptcy lawyer to assist you.

Hire an Unbundled Attorney for your Bankruptcy Needs

Hiring a bankruptcy attorney often leads to greater results. Still, these lawyers can be expensive. If you’re in financial trouble, paying for a bankruptcy attorney can be too much to take on. 

An unbundled lawyer can provide the guidance you need while keeping costs low. Unbundled lawyers are the same as traditional lawyers, but instead of handling every detail of your case from start to finish, they’re available to you only when you need them most. You can handle your case and feel confident knowing you have an attorney ready and willing to help.

Unbundled Legal Help can match you with a qualified lawyer in your area.

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