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There is a lot of misinformation out there about whether a person can file multiple bankruptcies, and when successive bankruptcies can be filed in relation to each other. Some people even have the mistaken belief that they cannot file more than one bankruptcy in a lifetime. The truth is that there are normally no limits on how many bankruptcies a person can file, but there are restrictions on the timing of multiple bankruptcies in relation to each other. It is important to comply with the timing restrictions for two reasons: (1) to obtain the full benefits of bankruptcy, and (2) to avoid inadvertently causing the court to treat you as a bad faith filer. So, let’s look at how long you have to wait between bankruptcies in different situations.
The first situation, and probably the most common, is where you filed for bankruptcy before, received your discharge, and now need to file for bankruptcy again because you have new debt that you need to discharge. In other words, this is a situation in which your prior bankruptcy was successfully completed. In this situation, how long you have to wait depends on what type of bankruptcy you filed previously, and what type of bankruptcy you want to file now. The rules are as follows:
If you have multiple prior bankruptcies in which you received a discharge, you will want to evaluate the waiting periods applicable to each of those bankruptcies. However, you do not need to look back further than 8 years, because the longest waiting period between any two bankruptcies is 8 years.
It is important to remember that these waiting periods only apply when you received a discharge in a prior bankruptcy. So, if you previously filed for bankruptcy, but did not successfully complete it and your case was dismissed, then the waiting periods described above do not apply.
Another thing to remember is that these waiting periods do not prevent you from filing for bankruptcy, they only determine whether or not you can receive a discharge in the new bankruptcy. In many cases, the primary purpose of filing for bankruptcy is to get the discharge. For example, if you are filing for Chapter 7 bankruptcy, then you are normally doing it to get the discharge, and if you are unable to get the discharge, then the bankruptcy is of no real value. In these situation, not being able to get a discharge means, as a practical matter, that you cannot file for bankruptcy.
But there are some situations where a bankruptcy may be beneficial even without a discharge. For example, if you are behind on your mortgage, you may want to file for Chapter 13 bankruptcy in order to catch up on your mortgage payments over time. Even if you do not get a discharge at the end of your Chapter 13 case, the bankruptcy has still served its purpose, because it allowed you to catch up on your mortgage.
Let’s look at an example. Say you filed for Chapter 7 bankruptcy on May 1, 2020, and received a discharge. It is now June 1, 2022. You incurred more credit card debt, and also fell behind on your mortgage, and you are considering filing for bankruptcy again to deal with these issues. You cannot file for Chapter 7 bankruptcy again and get a discharge, because it has not been 8 years since your prior Chapter 7. You also cannot file for Chapter 13 bankruptcy and get a discharge, because it has not been 4 years since your prior Chapter 7. But, you can file for Chapter 13 bankruptcy to catch up on your mortgage, even though it has been only two years since your prior Chapter 7. Of course, because you cannot receive a discharge, the Chapter 13 will not eliminate your credit card debt. But you can deal with this debt either by paying it through the Chapter 13 bankruptcy, or by paying or settling it after the bankruptcy is concluded.
Now, you may wonder why a Chapter 11 or Chapter 12 bankruptcy would not be an option for the second bankruptcy. And it is true that there are no similar waiting periods for receiving a discharge in a Chapter 11 or 12 bankruptcy after receiving a discharge in an earlier bankruptcy. But, as a practical matter, neither of these bankruptcies will be an option for most consumer debtors. Chapter 12 is only available to fishermen or family farmers, so most people will not qualify. Chapter 11 is available to any individual, but because of its complexity, its cost will be prohibitive to most consumer debtors. However, Chapter 11 would be a good option for people dealing with very substantial amounts of debt.
The second situation is where you file for bankruptcy, are not able to complete the bankruptcy for whatever reason, and your case gets dismissed. In such situations, you may need to file for bankruptcy again to deal with your debt, since the debt was not eliminated. There are some timing restrictions on the filing of the second bankruptcy in such situations, but they are much more narrow. The rule is:
In other words, the waiting period is at most 180 days from the day your prior case was dismissed. However, even this waiting period only applies if one of the two listed conditions is met. If neither of these conditions is met, then you can file a second bankruptcy case immediately after the prior bankruptcy case gets dismissed.
If you are in a bankruptcy that may end up being dismissed, and you want to preserve your ability to file another bankruptcy without waiting, it is very important to make sure that you do not do anything that would make you subject to this waiting period. This means, for one, that you should not ignore any court orders, or fail to follow court orders, or fail to do what is required to move the case forward.
Sometimes you may end up not following a court order, but your failure to follow the order would not be considered “willful.” This in turn would mean that the 180-day waiting period does not apply to you. For example, if you are in a Chapter 13 bankruptcy, and the court signs an order stating that you will pay $100/month into your bankruptcy plan, you may be unable to make the payment if your income goes down for reasons outside your control, resulting in the dismissal of your case. It is likely that this failure would not be considered “willful,” because it is a consequence of your changed circumstances. But other situations may not be as clear-cut. One common situation is if you file for bankruptcy without a lawyer, but then do not take any of the necessary steps to move the bankruptcy forward, resulting in the bankruptcy being dismissed. Whether a particular failure to comply with a court order is “willful” is a very fact-intensive question that can become very complicated, and it outside the scope of this article. If you need to file for bankruptcy within 180 days of the dismissal of your prior bankruptcy case, and you are not sure whether you would be able to do so, it is best to consult with an experienced bankruptcy attorney.
Similarly, if your prior bankruptcy was dismissed at your request, it is best to consult with a qualified bankruptcy attorney in your area to determine if the dismissal will prevent you from filing a new bankruptcy within 180 days.
We have helped many individuals navigate the complexities of refiling for bankruptcy for the second or subsequent time. Our goal with every client is to ensure that the bankruptcy process goes as smoothly as possible. Even if you have had multiple prior bankruptcies, we evaluate your eligibility for bankruptcy, advise you on the best bankruptcy options, and develop a tailored strategy designed to maximize the benefits of bankruptcy for your specific situation. To schedule a free consultation, call us at 480-788-0098 in Phoenix/Mesa, or 520-745-4429 in Tucson, or contact us online.
To discuss your financial situation and learn more about your debt relief options, give us a call at (520) 745-4429 or (480) 788-0098.
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