I would consider anyone who has gone through financially hard times only once in life extremely lucky. With this realization, the bankruptcy code was written to allow subsequent filings, but there are statutory waiting periods you must wait between each case. If you received a previous discharge, then you may have to wait to receive another discharge, depending on which chapters are in play. Take note that the time period is measured from the commencement of the previous case to the commencement of the current case, though you do have to actually receive a discharge to trigger a waiting period. If you file a Chapter 13 and later dismiss the case, for instance, you could immediately file a Chapter 7 the next day with no waiting period because you didn’t receive a discharge in the Chapter 13.
Chapter 7 Waiting Periods
- People wanting to file Chapter 7 must wait 8 years from a previous Chapter 7, Chapter 11, or Chapter 12 filing if they received a discharge in the prior Chapter 7. §727(a)(8)
- From a previous Chapter 13 filing, you must wait: §727(a)(9)
- 6 years if less than 70% of unsecured claims were paid in the Chapter 13 repayment plan;
- and no waiting period if
- 100% of unsecured claims were paid in the previous Chapter 13 payment plan, or
- at least 70% of unsecured claims were paid in the Chapter 13 plan that was proposed in good faith by the debtor, using his or her best effort.
Chapter 12 for Family Farmers
Most debtors are not eligible for Chapter 12, as a certain percentage of your income must come from a farming or fishing operation (foresters can also qualify). Chapter 12 debtors have no waiting period between filing, regardless of the previous Chapter filed. It’s the most forgiving chapter to file under, but people are eligible.
Chapter 13 for Individual Wage Earners
- Must wait 4 years from the filing of a previous Chapter 7, 11, or 12. §1328(f)(1)
- Must wait 2 years of a previous Chapter 13 filing if they received a discharge in the previous Chapter 13. §1328(f)(2)
Chapter 11 – For Individuals or Corporations
If the case being filed is a liquidating Chapter 11, then you must wait 8 years from a previous Chapter 7, 11, or 12 filing. §1141(d)(3).
One of the best and little known features of a Chapter 11, especially for individuals, is that there is NO WAITING PERIOD if the current case is a reorganization. Considering reorganizations are the only viable options for individuals, this means that if a person filed for Chapter 7 and needed to reorganize under Chapter 11 a short time later, there would be no limitation to receiving a discharge. This is one of the biggest differences between Chapter 11 and Chapter 13. Of course, the complexity and expense of a Chapter 11 make it more difficult for many people to benefit from a Chapter 11, but high-income or individuals heavily invested in real estate can often save hundreds of thousands through a Chapter 11.