Can You File Bankruptcy Twice?
Written by True Tamplin, BSc, CEPF®
Updated on July 10, 2021
Yes, you can file for bankruptcy twice; however, there are limits to how often you can receive a discharge.
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 yearsChapter 13 after Chapter 13: every 2 years
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.
Can You File Bankruptcy Twice FAQs
What is Bankruptcy?
What Is Bankruptcy? The Three Chapters of Bankruptcy
There are three common types of bankruptcy known as “chapters”in the U.S. bankruptcy code, Ch. 7, Ch. 11, and Ch. 13, each with varying criteria and consequences.
Ch. 7 Bankruptcy
The most common type of bankruptcy is Chapter 7.
Chapter 7 bankruptcy is known as “straight”or “liquidation”bankruptcy.
It is designed to give a “fresh start”by discharging debts that cannot be repaid through the liquidation of the debtor’s assets.
Upon filing Chapter 7, a trustee is appointed to sell the debtor’s non-exempt assets and distribute the proceeds to creditors.
For individuals, the law exempts certain assets such as retirement funds, primary residence, tools for their trade, and personal vehicles from being liquidated to pay back creditors.
This pays back creditors some of what they are owed and protects individuals from having all of their livelihood taken from them.
Ch. 11 Bankruptcy
Chapter 11 bankruptcy is primarily for companies, allowing them a break on paying their debts in order to restructure, come up with new terms for paying their creditors, and become profitable again.
This allows companies to stay afloat while coming up with a new way to pay back creditors.
Chapter 11 is the most complex and expensive form of a bankruptcy proceeding and should therefore be considered after other options have been explored.
Ch. 13 Bankruptcy
Chapter 13 bankruptcy, known as a “Debtor in Possession”Bankruptcy, stands in contrast with Chapter 7 because it allows the individuals to keep from liquidating their property.
Chapter 13 creates a new, more affordable payment plan for the debtor to repay creditors, usually lasting 3 to 5 years.
Once the payment plan is finished, the remaining unsecured debts are discharged.