Understand the timing and impact of consecutive court discharges when you file bankruptcy twice.

Bankruptcy is supposed to be a fresh start, but things don’t always work out the way we intend. If you’re facing new financial challenges after your final discharge, you may be wondering how many times you can file bankruptcy. The answer is as many times as you need, but they must be spaced out by a certain number of years.

This guide can help you decide if filing bankruptcy again will be a good idea or if you’ll just wind up in trouble again. We also explain what you can expect another filing to do to your credit, and what alternatives you may want to consider.
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Timing Between Discharge

If you want to file bankruptcy twice, the timing between discharges matters, as well as what chapter you claimed.

A big part of what the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) did when it was passed in 2005 was to prevent consumers from abusing the bankruptcy process. Essentially, lawmakers wanted to stop people from filing for bankruptcy as an “easy” way out of debt.

The law limits how many times you can file for bankruptcy by stipulating the amount of time required between filings. Essentially, if you received a discharge in your first bankruptcy, then a set amount of time must pass before you can have your debts discharged by the courts again.

So, while you can file for bankruptcy as many times as you need to, you won’t receive a second round of discharges until a certain amount of time passes.

The time between chapter filings

The exact amount of time between discharges depends on which type of bankruptcy you use for the first and second filing.

First FilingSecond FilingTime Required
Chapter 7Chapter 78 years from the first filing date
Chapter 7Chapter 134 years from the first filing date
Chapter 13Chapter 132 years from the first filing date
Chapter 13Chapter 76 years from the first filing date*

*There is an important exception to this rule that you should not. If you paid off all your unsecured debt in full or at least paid off 70 percent of the claims made on a plan entered into in good faith, then you can file for Chapter 7 sooner than this date.

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Issues with Chapter 7 conversion

When you file for Chapter 13 bankruptcy, part of the process will be that the court will officially approve a repayment plan you must follow to receive a final discharge. If you can’t agree on a plan that the court will approve, in some cases, you can convert your filing to Chapter 7.

However, if you already filed once, you have these varying time requirements before your second discharge. So, converting a Chapter 13 filing to Chapter 7 can be a problem. You may be past the amount of time required to receive a discharge with Chapter 13, but not long enough to receive a discharge with Chapter 7.

This makes having the right bankruptcy services on your side even more essential on a second bankruptcy, because you may be navigating some tough waters.

Refiling After Dismissal

In some cases, the first bankruptcy you file may be dismissed. Sometimes it can be for positive like your financial situation improved, so you didn’t need to file anymore. Dismissal can also be for bad reasons like you didn’t follow procedure so your case was dismissed.

In either case, positive or negative, a bankruptcy dismissal does not prevent you from filing again. What’s more, the time limits described above wouldn’t apply because your debts weren’t discharged. If your bankruptcy case was dismissed last year, then you can legally file again this year if you need to file.

The only time limit you need to worry about is that you may need to wait 180 days to file again. This only applies if your first filing was dismissed by the court because you didn’t follow their instructions. Check with your attorney to see if this applies to you.

Credit Report Notation for Bankruptcy

One issue that often confuses people about filing for bankruptcy a second time is the credit report notation that they still are likely facing. Bankruptcy is listed in the public records section of your credit report.

  • Chapter 7 bankruptcy is noted on your credit report for 10 years from filing date
  • Chapter 13 bankruptcy stays for 7 years from the filing date

This means that you may still have the first bankruptcy filing on your credit report when you decide to file again. The time when the bankruptcy notation falls off your credit report has nothing to do with your eligibility to file a second time.

Can I File Again?

However, many people assume that if the bankruptcy is still listed, they can’t file again. The confusion can lead to questions like this:

Question: I’ve been working with a debt settlement company since May 2017. They have settled six of my accounts with three more to go.

I chose not to do bankruptcy because it was still showing on my credit report, although it was discharged in 2006. And I didn’t know if I can file again.

How I got to this point was through unfortunate circumstances and bad habits. I’ve been living paycheck to paycheck, so I used payday loans anytime I had an emergency.  Then I got a car title loan just to pay other loans. Now I’m stuck with a foolish car title loan until October 2020.

The debt settlement has given me some relief. But I still have quite a bit to go, and I find myself being in the red each month. I have a budget for each pay period, but I still end up using overdraft funds almost every month($500 limit/$28 for each paid item).

Sometimes, I’m over by a $100 and sometimes by $300. It depends on what has happened unexpectedly in that pay period. Those additional fees of $28 each can add up. I’ve cut back all that I can and just pay my bills. I do get an extra $200 a month for keeping my grandchild on weeknight and weekends.

What can I do more to help with my financial difficulties?

Jo in California

Debt.com Howard Dvorkin responds…

Your story is complicated, Jo, but it’s not unusual. For two decades, I’ve seen Americans sink slowly into debt as if it were quicksand. They grab at anything they think will save them.  That does slow down the inevitable — but it doesn’t stop it.

I can give you some information that will make it easier to understand all the factors at play here. However, I recommend that you get in touch with someone that can help you understand how all of this applies in your specific financial situation.

#1: The credit report notation for your first bankruptcy should have fallen off years ago.

If you filed for bankruptcy in 2006, then the latest that penalty should have remained on your report is 2016. Even if you filed for Chapter 7, the public record notation should only remain for 10 years.

So, at a minimum, you should contact the credit bureaus to dispute why the item is still showing up on your reports. I recommend going to annualcreditreport.com to check your reports with all three bureaus (Experian, Equifax, TransUnion).

If you don’t know how to make a dispute, Debt.com offers a free guide to help you along.

#2: Enough time has passed that you can legally file bankruptcy again

The maximum amount of time that needs to pass between filings is 8 years. That means you’re well past the point of time required between your first and second discharge. You should be able to file for Chapter 7 or Chapter 13 without the time limit between your filings being an issue.

#3: Debt settlement may not be able to help with your title loan directly

A title loan is a secured type of debt. That means that the lender has the security of your vehicle as collateral if you fail to pay the loan back. If the value of your car is enough to pay off the loan, then they would be likely to repossess your car instead of settling the debt.

However, if you are slowly regaining stability through a debt settlement program, then the program may help you indirectly. If you can complete your settlement program, you may have the means to cover the title loan payments to finish it off by October of this year.

#4: Bankruptcy could save your car in certain situations, but not in others

In Chapter 7 bankruptcy, your assets are liquidated to pay off your debts. The car could be sold to satisfy the title loan. In some cases, you may be able to “redeem” the car by paying its current market value, if that value is less than the amount left on the loan.

But this only works in some circumstances and you generally must make that payment in full. It doesn’t sound like you have the means to do that given your current financial situation.

Chapter 13 bankruptcy may protect your assets from liquidation because you set up a repayment plan. However, there are exceptions that may apply here as well. At the least, filing for bankruptcy triggers an automatic stay, so if you aren’t keeping up with the payments, it could at least help you avoid impending repossession.

The bottom line…

You need to talk to a certified professional that can dive into where your finances are right now. There are a lot of specifics and exceptions to rules that a qualified expert needs to evaluate.

The good news is that you’ve come to the right place. Debt.com works with a network of debt relief service providers, from nonprofit credit counseling agencies to bankruptcy attorneys. We can connect you with a certified debt resolution specialist that will evaluate your situation and match you with the best services for your needs.

If I were to guess, Jo, bankruptcy might once again be your best option. But you need to talk one-on-one with someone first before you decide to file.

Start the filing process, so you can get the fresh start you need.

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Article last modified on June 23, 2020. Published by Debt.com, LLC