Filing for bankruptcy is a legal process that allows individuals or businesses to seek relief from overwhelming debt. However, it is not a decision to be taken lightly, as it can have long-lasting consequences on one’s financial future. One common question that arises when considering bankruptcy is how often it can be filed. In this article, we will explore the frequency with which individuals can file for bankruptcy and the factors that may affect this process.
Before delving into the frequency of filing bankruptcy, it is essential to have a basic understanding of the different types of bankruptcy available. The two most common types for individuals are Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 bankruptcy: This type of bankruptcy involves the liquidation of assets to repay creditors. It is typically available to individuals with limited income and significant debt. Chapter 7 bankruptcy can provide a fresh start by discharging most unsecured debts, such as credit card debt and medical bills.
Chapter 13 bankruptcy: Unlike Chapter 7, Chapter 13 bankruptcy involves creating a repayment plan to pay off creditors over a period of three to five years. This type of bankruptcy is suitable for individuals with a regular income who can afford to make monthly payments towards their debts.
Frequency of Filing Bankruptcy
The frequency with which individuals can file for bankruptcy depends on the type of bankruptcy previously filed and the time elapsed since the last filing. The specific rules governing the frequency of filing bankruptcy are outlined in the United States Bankruptcy Code.
Chapter 7 bankruptcy: If an individual has previously filed for Chapter 7 bankruptcy and received a discharge, they must wait eight years from the date of the previous filing before filing for Chapter 7 again. This waiting period ensures that individuals do not abuse the bankruptcy system by repeatedly seeking discharge of their debts.
Chapter 13 bankruptcy: If an individual has previously filed for Chapter 13 bankruptcy and received a discharge, they must wait two years from the date of the previous filing before filing for Chapter 13 again. However, if they want to file for Chapter 7 bankruptcy after a Chapter 13 discharge, they must wait six years.
Exceptions to the Rules
While the general rules mentioned above apply in most cases, there are exceptions that may allow individuals to file for bankruptcy sooner than the specified waiting periods. These exceptions are typically granted in situations where the individual experiences extreme financial hardship or faces unforeseen circumstances.
For example, if an individual has incurred new debts since their previous bankruptcy filing due to circumstances beyond their control, such as medical expenses or job loss, they may be eligible for an exception to the waiting period. However, the decision to grant an exception is at the discretion of the bankruptcy court, and individuals must provide compelling evidence to support their case.
In conclusion, the frequency with which individuals can file for bankruptcy depends on the type of bankruptcy previously filed and the time elapsed since the last filing. For Chapter 7 bankruptcy, the waiting period is eight years, while for Chapter 13 bankruptcy, it is two years. However, exceptions may be granted in certain circumstances, allowing individuals to file for bankruptcy sooner. It is crucial to consult with a qualified bankruptcy attorney to understand the specific rules and options available based on individual circumstances.
– Cornell Law School Legal Information Institute: bankruptcy.law.cornell.edu
– United States Courts: www.uscourts.gov
– Internal Revenue Service: www.irs.gov