Bankruptcy provides a legal means for debtors to address their obligations and start over financially. Many filers hope their trip to a Maryland federal court will be their first and only experience with bankruptcy. However, financial situations can be challenging for many reasons. So, it is not impossible to suffer from overwhelming debt a second or third time. That raises questions about how many often someone can file for bankruptcy.
Repeat visits to bankruptcy court
Under the law, there are no limits to how many times someone can file for bankruptcy. Filing for bankruptcy repeatedly might not be preferable, but it could also be unavoidable. That said, there are limits on the frequency of filing. A subsequent bankruptcy filing requires a specific amount of time to pass.
The time someone must wait depends on the chapter they previously filed and the one they intend to file. If someone filed for Chapter 7, they must wait eight years to file for Chapter 7 again or four years to file for Chapter 13. Similarly, anyone who filed Chapter 13 must wait two years to file for Chapter 13 again or six years to file for Chapter 7.
Chapter 13 vs. Chapter 7
Chapter 13 and Chapter 7 bankruptcy involve a different approach to addressing that. In Chapter 13, the debtor devises and presents a payment plan to the court. The payment plan typically runs for three to five years and involves repaying a portion of the debt owed to creditors. Some debt ends up being discharged.
Chapter 7 bankruptcy deals with liquidation, where assets are sold to pay debts, and the remaining debt faces a discharge. Chapter 7 requires passing a means test to establish eligibility. Those who do not meet the requirements could explore other options.