Financial hardship can happen to anyone. If you are overwhelmed by debt, and cannot reach a payment plan with your creditors, one of the options you can consider is declaring bankruptcy.
However, if you have declared bankruptcy before and you are considering taking this route again, you might be wondering if there is a limit to the number of times you can declare bankruptcy and how much of a gap you need to leave between filings.
So can you declare multiple bankruptcies?
You can declare bankruptcy multiple times in the United States. However, the United States Bankruptcy Code sets the frequency of filing bankruptcy. You will not be eligible for another bankruptcy if you file your claim before the lapse of the waiting period.
The frequency of declaring bankruptcy generally depends on the type of bankruptcy (Chapter 7 or Chapter 13).
Chapter 7 bankruptcy
Under the U.S Bankruptcy Code, you can file for Chapter 7 bankruptcy once every 8 years. It is important to note that the clock begins to tick on the date you filed your previous claim. Your chapter 7 bankruptcy will also be denied if you received a discharge in either Chapter 12 or Chapter 13 bankruptcy within 6 years.
Chapter 13 bankruptcy
The U.S Bankruptcy Code allows you to declare Chapter 13 bankruptcy once every 2 years. That said, your Chapter 13 bankruptcy will be denied if you have received a discharge of Chapters 7, 11 and 12 within the last 4 years.
Bankruptcy can offer a welcome relief if you are unable to pay your debts. That said, knowing how bankruptcy laws work can help you avoid costly mistakes while declaring bankruptcy.