How Many times can Bankruptcy be filed? Discharges in Chapter 7 and Chapter 13.
While bankruptcies can technically be "filed" repeatedly, the Question to ask is debts owed can be wiped out or discharged in the subsequent bankruptcy.
Generally speaking individuals file under three Chapters of the Bankruptcy Code: Chapter 7, 11 and Chapter 13.
1. Discharging debts in Chapter 7 Cases.
Debts are discharged in a Chapter 7 upon completion .
A debtor, however, can only discharge debts in a Chapter 7 if the debtor has not filed: 1. A previous Chapter 7 or 11 within 8 years. 2. A previous Chapter 12 or 13 within 6 years (unless the Chapter 13 was a 100% plan or a 70% plan proposed in good faith and was the debtor's best effort).
See 11 USC 727 (a) (8) and (9) which provide: (8) the debtor has been granted a discharge under this section, under section 1141 of this title, or under section 14, 371, or 476 of the Bankruptcy Act, in a case commenced within 8 years before the date of the filing of the petition; (9) the debtor has been granted a discharge under section 1228 or 1328 of this title, or under section 660 or 661 of the Bankruptcy Act, in a case commenced within six years before the date of the filing of the petition, unless payments under the plan in such case totaled at least - (A) 100 percent of the allowed unsecured claims in such case; or (B)(i) 70 percent of such claims; and (ii) the plan was proposed by the debtor in good faith, and was the debtor's best effort;
2. Discharging debts in Chapter 13 Now the rules on getting a discharge in a Chapter 13 are different. Section 1328(f) provides for a discharge. 1. If the Chapter 13 is filed 4 years after discharge in a previous 7, 11 or 12, or 2. Two years after receiving a discharge in a previous 13. This section provides: ....the court shall not grant a discharge of all debts provided for in the plan or disallowed under section 502, if the debtor has received a discharge-- (1) in a case filed under chapter 7, 11, or 12 of this title during the 4-year period preceding the date of the order for relief under this chapter, or (2) in a case filed under chapter 13 of this title during the 2-year period preceding the date of such order.
3. No Discharge for Corporations
While individuals receive a discharge in bankruptcy, corporations do not. Corporations filing Chapter 7 do so to provide a mechanism for an orderly closing down of the corporation. The corporate creditor can not prosecute collection against a corporation while the case is pending and after the case is closed there is no corporation to pursue the debt against.
Corporations are ineligible for Chapter 13 but may seek to reorganize under Chapter 11. In a Chapter 11 they propose a repayment plan to pay their debts and once this plan is confirmed by the court, creditors are bound by the terms of the plan and cannot only recover repayment in the manner proposed by the Chapter 11 plan.
4. Sanctions for serial bankruptcy filers.
There are of course other issues and if there is a debtor who files multiple times, they can also be sanctioned by the court and the court and also enter an order preventing them from refiling if it considers them an abusive filer. See In re Adams, In re Balmer, In Re Rusher
Bankruptcy is designed to help the honest debtor to get out debt. Judges take a very tough stand on repeat and serial filers who abuse the system.