Bankruptcy offers consumers the opportunity to start their financial journey anew. For those facing crushing debt burdens, that’s incredibly good news. However, it’s important to choose the right type of bankruptcy, and then to know the rules of how things work. In this post, we’ll explore what you need to know about Chapter 13 bankruptcy, including how often you can file for it.

 

What Is Chapter 13 Bankruptcy?

While most people think of Chapter 7 when they imagine declaring bankruptcy, Chapter 13 is actually the most common type in the United States. While more consumers have filed Chapter 7 than Chapter as of 2017 (8.7 million to 4.1 million), things began to change in 2010, according to the United States Courts, which explains, “Following the last recession, overall bankruptcy filings peaked in 2010. Chapter 7 consumer bankruptcy filings have declined since 2010 and Chapter 13 filings have leveled off in the last few years. The percentage of total filings that Chapter 7 filings accounted for has declined since 2010, whereas the percentage of total filings under Chapter 13 filings has increased.”

Why are more people beginning to file Chapter 13 than Chapter 7? There are many reasons for this, including the following:

 

• Under Chapter 13, only some of your debts are discharged. Many are reduced and then you can reach a repayment agreement with your creditors.

 

• Chapter 13 has less impact overall on your credit score because most creditors receive at least some repayment.

 

• Chapter 13 only stays on your credit report for seven years. Chapter 13, on the other hand, will stay for 10 years.

 

• There is no means test required, which means more people qualify for this form of bankruptcy.

 

• Allows you to retain specific assets that would otherwise be sold under a Chapter 7 filing.

 

There are many reasons that you might choose to file for Chapter 13 bankruptcy instead of Chapter 7. However, what if you find yourself in financial difficulty again later? How often can you file Chapter 13? The answer is “it depends”.

 

The Complex Situation of Filing for Bankruptcy More Than Once in Georgia

Often, consumers feel that if they can just get their financial situation straightened out, they won’t have any further problems. They file for bankruptcy and go through the process, only to find themselves back in the same situation a few years later. This could be due to any number of reasons – the loss of a job, the loss of a spouse who was also an earner who helped with the bills, the need to relocate somewhere, changes to the cost of living…you get the idea. It’s not always about poor spending habits or the inability to manage money. In fact, most people who find themselves facing the prospect of a second bankruptcy are there due to forces outside their control.

Can you file for Chapter 13 bankruptcy more than once? If so, how often can you file? Is there a limit to the number of times you can file in your lifetime?

The answers to these questions are complicated and some may surprise you. Let’s break things down. Note that the timelines included in the answers below all begin on the day you filed the previous bankruptcy, not the date of discharge, date of stay, or the date that the bankruptcy falls off your credit report).

 

Can you file for Chapter 13 bankruptcy more than once?

 

Yes, you can file for chapter 13 bankruptcy multiple times. In fact, you can file as many times as you need to throughout your lifetime.

 

When can you file for a second Chapter 13 bankruptcy?

 

The rule here is that you can file for Chapter 13 bankruptcy two years after a previous Chapter 13 filing.

 

Can you file for Chapter 13 bankruptcy after filing Chapter 7 bankruptcy?

 

Yes, you can. However, you’ll need to wait four years from your Chapter 7 before you can file for Chapter 13.

 

Can you file for Chapter 7 bankruptcy after filing for Chapter 13 bankruptcy?

 

Yes, that’s possible. However, you will need to wait six years or until your repayment plan is satisfied before you can do so.

As you can see, bankruptcy is not a once-and-done thing. You can file multiple times throughout your lifetime. However, why would someone do that? And why would someone change the type of bankruptcy?

 

Why Would Someone Need to File for Chapter 13 Bankruptcy a Second Time in Georgia?

It would be nice if life was predictable. You would know exactly how much money you would earn, and precisely what your debts would be at all times. In that scenario, bankruptcy would never occur, because you would never be taken by surprise, never encounter an emergency, and never face a financial shortfall.

Unfortunately, life is not predictable. It’s filled with pitfalls and problems. You might get sick and find yourself unable to work and earn money for a time. You could face being laid off or fired. Your position at work might be eliminated and you could find yourself faced with taking a lower-paying position, instead.

There are so many possibilities that it’s impossible to list them all. Suffice to say that anyone can find themselves facing a difficult financial situation even after going through bankruptcy a first (or second, or third) time. There are no guarantees in this world, and it is all too easy to find yourself facing unforeseen, unplanned challenges.

 

Why Would Someone Want to Switch Bankruptcy Types?

Obviously, there are plenty of potential reasons why someone would need to file for Chapter 13 bankruptcy more than once. However, why might someone want to switch their bankruptcy type? For instance, why would someone file for Chapter 7 and then file for Chapter 13, or vice versa?

It really all comes down to the protections that each type of bankruptcy offers and how those tie into the financial strategy you and your attorney create. We’ll explore some of the possible reasons for switching bankruptcy types below.

 

• Repeated Chapter 13: In addition to the very real prospect of facing significant financial challenges, repeating a Chapter 13 filing could be a good way to handle things like tax debt and student loan debt, which cannot be discharged and must be repaid.

 

• Chapter 7 to Chapter 13: Going from Chapter 7 to Chapter 13 is a viable strategy after dealing with unsecured debts and now needing to create a repayment plan to deal with debts that could not be discharged.

 

• Chapter 13 to Chapter 7: This strategy can help you deal with unsecured, dischargeable debts after you’ve paid other creditors. In most instances, you’ll need to pay back 100% of your debt under Chapter 13, but sometimes you can pay as little as 70% back. However, your initial bankruptcy case must be “in good faith” before you can file for Chapter 7 bankruptcy after filing for Chapter 13 bankruptcy.

 

Switching bankruptcy types is complicated, though, and should only be done as part of a larger strategy to help you deal with different types of debt. At Morgan and Morgan, we can help create an overarching strategy that will take you from suffocating under debt to living debt-free.

 

The Effect of Multiple Bankruptcies on Your Credit Score in Georgia

While you can certainly file for bankruptcy as many times as necessary, there are some good reasons to consider avoiding it if possible. Remember that each bankruptcy filing will remain on your credit report for a long time – seven years for Chapter 13 and 10 years for Chapter 7 filings.

While they are on your credit report, your score will suffer. You’ll face higher interest rates, as well as finding it harder to locate a lender willing to work with you. When you add multiple bankruptcies to the mix, things become even more challenging.

Your credit score will sink lower and you’ll deal with the repercussions of having a bankruptcy on your credit for a longer period. For instance, if you were to file for Chapter 13 as soon as it is allowed by law (two years after the initial filing), your report will be affected for nine years. If you go from a Chapter 13 to a Chapter 7, you could be facing 12 years with a bankruptcy on your credit report. During that time, you’ll struggle to find lenders who will work with you and will also face hardships in finding employment and even in renting a home.

Finally, you also face increased scrutiny by the court with subsequent bankruptcy filings. Ultimately, the court is responsible for determining whether to allow the filing or not, so you can expect a lot of attention if you file for Chapter 13 a second time during the assessment.

 

Struggling with Debt in Georgia? We Can Help

There are no easy answers when it comes to debt and its effects on your life. Whether you’re thinking about filing bankruptcy for the first time or you need to file Chapter 13 a second time, we can help. At Morgan and Morgan, we’ve worked with clients in your situation to help create a strategy to help them get out of debt and enjoy financial stability and certainty in their lives. We can do the same for you. Contact us today to learn more about the process of filing Chapter 13 more than once and how it might fit into your financial strategy.