The technical answer is that there are no limits on how many times someone can file for bankruptcy. However, bankruptcy courts can place restrictions on you filing a bankruptcy petition if you have run afoul of procedures in the past or the court feels you are abusing the bankruptcy system. If you have previously filed for bankruptcy and are unsure if it was discharged, dismissed or even dismissed with prejudice, you should speak to a bankruptcy attorney that is knowledgeable about all bankruptcy rules and regulations to make sure you are eligible to file for bankruptcy, or even if bankruptcy makes sense for you at this time.
How many times can I get a discharge in bankruptcy?
If you have already had your debts discharged in a previous bankruptcy, you will have to wait a certain amount of time before you can receive another discharge. An example of this is if you were to receive a discharge under a Chapter 7 bankruptcy, you would have to wait 8 years before you could receive another chapter 7 discharge, but you could receive a discharge under a chapter 13 bankruptcy in 6 years.
People are not limited to having only one or two discharges, but in practice people are limited to how often they can receive a discharge or enter into a bankruptcy that would meet their goals.
What is a chapter 20 bankruptcy?
A chapter 20 bankruptcy plan is a joking term for when a person files a chapter 7 bankruptcy, gets a discharge and then files a chapter 13 bankruptcy right after. This is used many times by people that have fallen behind on their mortgage when they cannot afford to start a chapter 13 bankruptcy right away. This process has both pros and cons.
For instance, if a person has equity in their home, a chapter 7 trustee will want to sell the house to pay off creditors. The homestead exemptions allowed by state or federal law come into play in a situation like this, and anyone that is a homeowner should consult with an attorney prior to filing for bankruptcy to ensure their home is protected.
There are drawbacks to going for a chapter 20 bankruptcy if you would be eligible for lien stripping as not every jurisdiction agrees whether a person is allowed to lien strip if they are no longer eligible for a chapter 13 discharge. Once again speaking to a knowledgeable bankruptcy attorney makes sense rather than finding out the hard way that a great benefit for filing bankruptcy was lost.
There is also the possibility of a bad faith objection by the filers creditors if they feel the filer is abusing the bankruptcy system. These objections can be defeated, but having an experienced attorney on your side is optimal in these situations such as the New Jersey Bankruptcy Attorney.
Thanks to authors at Patel Soltis for their insight into Bankruptcy Law.