How often can I file for bankruptcy?

Bankruptcy provides people in financial trouble an important option for getting their life back together, but there are limits to how often a person can use this protection. The federal government doesn’t want people using bankruptcy as a money management tool by continuously running up debt only to repeatedly file for bankruptcy.

To prevent people from abusing the system, a person can only file for bankruptcy every few years. If a person’s debts have been discharged as a result of a Chapter 7 bankruptcy, they cannot be discharged again under Chapter 7 for another eight years. If they filed for Chapter 13, they must wait for at least six years before getting relief by filing for Chapter 7. A Chapter 13 can be filed any time after a Chapter 7 filing though you may not receive a discharge if the Chapter 13 is within four years of the Chapter 7 filing.

Of course, bankruptcy provides other forms of help in addition to discharging debts. When filing for bankruptcy protection, something called an “automatic stay” goes into effect. This prevents creditors from trying to collect on debts or from taking action like foreclosure or repossession. Some people have taken advantage of this protection by repeatedly filing for bankruptcy to get an automatic stay, even though they have no intention of going through with the bankruptcy.

To help combat this abuse, a bankruptcy automatic stay can now only last for thirty days if a pending bankruptcy was dismissed within the last year.  If two or more cases were dismissed in the previous year, no automatic stay goes into effect for a third filing. In some situations, a person may be prevented from filing for a certain amount of time after a case is dropped. For example, if a bankruptcy case is dismissed because the person who filed failed to comply with court requests, they may have to wait 180 days to file again.

These laws are in place to make sure that bankruptcy is only used for its intended purpose – to offer those in financial trouble a clean slate.