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How often can someone file for bankruptcy?

On Behalf of | Feb 28, 2022 | Bankruptcy

Alabama residents who find themselves overwhelmed by debt can escape their situations and get fresh starts by filing Chapter 7 or Chapter 13 bankruptcies, and there is no law preventing them from seeking this relief more than once. However, there are restrictions in place that establish waiting periods between bankruptcy filings. The length of the time people must wait before seeking debt relief again depends on the type of bankruptcy they filed previously and whether or not their case was discharged.

Waiting periods

When a bankruptcy is discharged, the person who filed it must wait before they can pursue debt relief again. When a Chapter 7 bankruptcy is discharged, an individual must wait four years before filing a Chapter 13 bankruptcy and eight years before filing another Chapter 7 bankruptcy. When a Chapter 13 bankruptcy is discharged, an individual must wait two years before filing another Chapter 13 bankruptcy and six years before filing a Chapter 7 bankruptcy. These waiting periods begin on the filing date of the previous bankruptcy petition.

Exceptions

There are a few exceptions to these general rules. People who file bankruptcies only have to wait 180 days before they seek debt relief again if their cases are dismissed instead of discharged, and the waiting time between Chapter 7 and Chapter 13 bankruptcies may be waived completely for individuals who paid 70% or more of their unsecured debts. The four-year wait between Chapter 13 and Chapter 7 bankruptcies can also be avoided by people who want to set up a payment plan to repay debts that were not included in their Chapter 7 cases. When this happens, the Chapter 13 bankruptcy cannot be discharged.

Bankruptcy myths

Allowing individuals to seek fresh financial starts two or more times shows that the bankruptcy laws were written to help people escape unmanageable financial situations and not punish them for mistakes they may have made. Many people think they can only file for bankruptcy once, but that is just one of the many myths surrounding debt relief.