Bankruptcy Protection: How Long Must You Wait to File Again?
Updated: Feb 8
The simple question of How long after bankruptcy can you file again? has a simple answer. The answer is you can always file again immediately. The real questions however are which chapter you can file and whether you can get a discharge of your debts if you file. Those answers are much more complicated.
While the prospect of filing bankruptcy again especially shortly after a previous filing- might seem absurd to some, it can actually be part of an intentional strategy. In fact, sometimes the first bankruptcy is actually filed in contemplation of the second bankruptcy.
The key factor in all this is whether the debtor needs a discharge in the second bankruptcy case. If the debtor does not even need a discharge, then the waiting period to file is irrelevant. As previously mentioned, the debtor might have filed the first case with the intent of then immediately filing the second case. This scenario is typically referred to as a Chapter 20 bankruptcy.
In this scenario the debtor first files Chapter 7 to discharge all the debt it can (i.e., perhaps the debtor has non dischargeable student loans, domestic support payments, back income taxes, etc..). The debtor then files a Chapter 13 to pay off the debts that were not wiped away in the first bankruptcy and maybe even mortgage arrears to stay in its residence.
Another scenario the debtor might file Chapter 13 after filing Chapter 7 even though the debtor is not eligible for a Chapter 13 discharge is when the debtor has some non dischargeable debt from its chapter 7 (perhaps the debtor could not distinguish a debt because it was incurred fraudulently), and the debtor would rather pay off this debt through bankruptcy court imposed protection rather than deal with the creditor through state courts and/or garnishments. In this case the debtor knows that the completion of the Chapter 13 will not come with a discharge, but the debtor might still rather pay off the debt within the confines of a bankruptcy at 100%, therefore not needing a discharge. In the alternative, the debtor might not pay off this debt at 100% and then will deal with the remainder after the conclusion of this Chapter 13, perhaps by immediately filing another.
In the scenario where the debtor is filing again with the expressed goal of getting another discharge, the debtor needs to be familiar with the 2, 4, 6, 8 rule. If the debtor is filing a Chapter 13 after having previously filed a Chapter 13 in which the debtor received a discharge, the debtors second case must be filed at least two years after the discharge order.
The four-year rule comes into play when the debtor files Chapter 7 in the original case and Chapter 13 in the second case. The debtor is not eligible for a Chapter 13 discharge if the second was filed less than four years after the first case was filed.
The six-year rule comes into play when the Chapter 13 is filed first and the Chapter 7 is filed second. Where the Chapter 13 resulted in a discharge, the debtor must wait six years from the Chapter 13 filing date to be eligible for a discharge. There is an exception to this rule in that if in the previous Chapter 13 the allowed unsecured claims were paid off at 100%, or at least 70% through the debtors best efforts, then the six-year rule does not apply.
Finally, the eight-year rule is the simplest of the bunch. It is applicable whether both the first case and the second case are Chapter 7s, and the first case resulted in a discharge. In this scenario, the debtor cannot file Chapter 7 again until at least eight years after the filing date of the first case.