While very few people plan to repeatedly file for bankruptcy, there are no restrictions on how many times someone may file for bankruptcy. However, filers that need additional financial relief need to understand how things could be different this time.
Abide by the Time Limits
Each type of bankruptcy has its own time rules. You must wait the prescribed time before you can file again:
- If your previous filing was using Chapter 7, you must wait at least 8 years from the date you filed your previous case to file Chapter 7 again.
- If your previous filing used Chapter 13, you could file again in 6 years. Since Chapter 13 is a debt reorganization plan that is meant to take several years to complete, the filer may not have paid off all their debts.
- If you decide to switch things up and file Chapter 13 after filing Chapter 7, you must wait 4 years after the filing date of Chapter 7.
- If you want to file for Chapter 7 after previously filing Chapter 13, you can do so 6 years after the Chapter 13 filing. However, it may be possible to file Chapter 7 earlier than 6 years if you have paid off most of your previous Chapter 13 debt.
Filing Just for the Stay
Bankruptcy's automatic stay provides powerful financial relief for consumers. It stops debt collection activities, cancels wage garnishment, removes real estate liens, and stops foreclosures and vehicle repossessions. That means some consumers file for Chapter 13 as soon as the waiting period ends from a previous action so that they can use the automatic stay to help them hang on to property. For instance, if you are about to lose your home because of past due mortgage payments, filing Chapter 13 puts a stop to foreclosure proceedings. This may provide filers with some time to work with the lender, refinance the home, or negotiate for a new Chapter 13 plan.
It can be difficult for some to decide on what chapter of bankruptcy is the best choice for their situation. However, the laws provide filers, in some cases, with the ability to switch to another form of bankruptcy even when the current filing is unfinished. Speak to a bankruptcy attorney to find out what you can do to improve your financial situation and what your options are when it comes to filing for a second or more time.