How Long Do I Have to Wait before I Can File for Bankruptcy Again?

How Long Do I Have to Wait before I Can File for Bankruptcy Again?

Last updated: July 2009

The following questions were submitted to John Roska, an attorney/writer whose weekly newspaper column, "Q&A: The Law," runs in the St. Louis Post-Dispatch (Illinois Edition) and the Champaign News Gazette. This article was published on July 15, 2009.

Q: How long do I have to wait before I can file for bankruptcy again?  I went bankrupt several years ago, and recently got laid off so I’m again having financial problems.  What’s the waiting period?

A: In most cases, it’ll be 8 years between bankruptcy filings.  That’s the waiting period between “chapter 7” bankruptcies.  It gets more complicated if you want to file different kinds of bankruptcies.

The two main kinds of bankruptcy take their name from chapter 7 and chapter 13 of the federal bankruptcy code.  Chapter 7 is the most common, and simply wipes out most debt.  A chapter 13 bankruptcy works out debt instead, by creating a 5-year plan to repay what’s owed.

Choosing between chapters 7 and 13 depends on many factors, but an important one is how each deals with secured debt.  That’s debt backed up by collateral, like a house or a car.  Collateral provides “security” for the loan, by providing something besides the debtor’s pockets to aim at when a loan goes bad. 

Secured debt gets special treatment in bankruptcy.  The creditor either gets repaid in full, gets the collateral, or gets its value.  In a chapter 7 case, secured debt is often “reaffirmed,” so that it survives the bankruptcy, and the debtor continues paying.  Or, the debtor can “surrender” the collateral, by returning it to the creditor.  Unsecured debt—like credit cards or medical bills—simply gets discharged.

In a chapter 13 repayment plan, secured debt gets repaid in full.  Unsecured debt gets anywhere between 1 and 100 cents on the dollar.

Since most people do chapter 7 bankruptcies, the most common waiting period between bankruptcies will be 8 years.  (Until the bankruptcy law “reform” in 2005, it was 6 years.)  That’s 8 years between filing case #1 and filing case #2, if both are chapter 7, and case #1 resulted in a discharge.

If case #1 was a chapter 7, and case #2 is a chapter 13, it’s only a 4 year wait, between DISCHARGES.  You can file a chapter 13 immediately after your chapter 7 discharge, but you’ll have to wait 4 years before getting a chapter 13  discharge.  During that 4 year wait, you can be making payments on a repayment plan that will lead to a chapter 13 discharge.

If bankruptcy #1 was a chapter 13, and bankruptcy #2 is a chapter 7, you must wait 6 years between filings.  Unless, of course, the first bankruptcy paid off at least 70% of unsecured debt.  Then, there’s no waiting period at all.  You can go immediately from the discharge in the chapter 13 case to filing the chapter 7.  

Technically, there’s a 2 year wait required between filing chapter 13 cases.  But, that’s rarely a problem since chapter 13 cases usually take at least 2 years to complete.

All the above waiting periods assume that the first bankruptcy case was successfully completed, and discharged debt.  If case #1 got dismissed, you can immediately re-file a new case.  But, if that dismissal was for “willful” misbehavior of some kind, you’ll have to wait 180 days before filing any kind of new bankruptcy case.
 

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