If you’re weighing your options regarding filing bankruptcy in Texas, you may be wondering –
- “How many times can I file bankruptcy?”
- “What if I need to do this more than once?”
- “Will one bankruptcy be enough to help me bail myself out?”
- “What if I need a second, or even a third, fresh start?”
Filing for Chapter 7 or Chapter 13 Bankruptcy involves an individual person filing a case in federal court, and working with a specially-appointed, specially-qualified “trustee” in hopes of partially or completely eliminating their otherwise overwhelming debt. A third type of bankruptcy, called Chapter 11 Bankruptcy, is available for businesses. Regarding each of these types of bankruptcy, the Houston bankruptcy attorneys at the Law Offices of Kretzer and Volberding P.C. have expertise in this area of law after years of working with clients seeking a debt-free future.
There is no reason to feel ashamed for filing bankruptcy – in fact, the U.S. Courts recently reported that nearly 1 million Americans file for bankruptcy every year, with 97% percent of the filers being individuals struggling with consumer debts like credit cards and loans. The same report also noted that Texas’ four federal judicial Districts are among the top 20 of the nation’s 94 federal district courts in terms of bankruptcy filings.
How Many Times Can You File Bankruptcy in Texas?
The law imposes no limits on how many times you can file for bankruptcy in Texas. During the Great Depression in the early 1930s, the United States Supreme Court stated a philosophy that has stood the test of time, stating that bankruptcy “gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.”
With this philosophy in mind, the bankruptcy courts keep their doors open in the event that individuals or businesses need to return more than once to seek relief.
However, the courts do apply a greater degree of scrutiny in terms of granting discharges of debts. Depending on the number of bankruptcy filings, the type of filing, and the length of time between filings, you may have a harder time discharging your debts, which for many is the raison d’etre for bankruptcy filing in the first place.
Bankruptcy Filing vs. Discharge
As we have explained, there is no limit on the number of times a person or a business can file for Chapter 7, Chapter 11, or Chapter 13 bankruptcies. To be clear, bankruptcy itself is merely a filing process with the Federal District Bankruptcy Court which opens up your case – including your assets, debts, liabilities, and inability to pay – for review.
However, in all but a few cases, a bankruptcy filing also generates something called an “automatic stay” from creditors, meaning that after you file bankruptcy in federal court, your creditors are legally prevented for a certain amount of time from pursuing you in the state courts for failure to pay your debts. An automatic stay is like a shield, preventing creditors from suing you while the bankruptcy trustee and judge work together to assess your case.
Different from a bankruptcy filing, which happens at the beginning of your case, is a bankruptcy discharge, which happens at the end of your case. Discharge means that the court has reviewed your financial situation, determined you are unable to pay some or all of your debts and discharged your obligation to pay them.
How Many Times Can You File Chapter 7 Bankruptcy?
How often can you file Chapter 7 in Texas? There is no limit on the number of times a person can file for Chapter 7 bankruptcy, also known as “liquidation bankruptcy.” However, depending on the number of times a person files for this type of bankruptcy, there is a waiting period for the discharge of debts.
Waiting Period After Bankruptcy Discharge for Chapter 7
As we’ve explained, the answer to the question, “how many times can you declare Chapter 7 bankruptcy in Texas?” is “unlimited.” However, relevant portions of the Federal Bankruptcy Code guide your time in the waiting room for discharging of debts between bankruptcy filings.
If any of the math seems complicated, don’t worry, that is why attorneys are here to help you.
Breaking it down, a person who successfully receives a Chapter 7 Bankruptcy discharge of debts must wait eight (8) years to receive a second Chapter 7 Bankruptcy discharge, no matter when they file their second bankruptcy action.
If the same person receives a Chapter 7 Bankruptcy discharge and files subsequently for a Chapter 13 Bankruptcy, they will only have to wait four (4) years to receive a Chapter 13 discharge.
As you may have noticed, in any case where multiple bankruptcy filings include Chapter 13, the law goes easier on the debtor. This is because Chapter 13 bankruptcy is known as “reorganization bankruptcy,” and many debts are often repaid in a Chapter 13 bankruptcy, rather than discharged.
How Many Times Can You File Chapter 13 Bankruptcy?
How many times can you declare bankruptcy under Chapter 13? There is no limit on the number of times a person can file for Chapter 13 bankruptcy. However, depending on the number of times a person files for this type of bankruptcy, there is a waiting period for discharging of debts, as detailed above.
Waiting Period After Bankruptcy Discharge for Chapter 13
As we’ve explained, and just like with Chapter 7, the answer to the question “how many times can you file bankruptcy in Texas?” under Chapter 13 is unlimited. However, a filing is not the same is a discharge. A person who successfully receives a Chapter 13 Bankruptcy discharge and subsequently files Chapter 7 Bankruptcy must wait six (6) years to receive a Chapter 7 Bankruptcy discharge.
If the person receives a Chapter 13 discharge and files again for Chapter 13 bankruptcy, they will also only have to wait two (2) more years for a discharge.
Again, the law gives time for good behavior to the Chapter 13 debtor, who is paying a portion of their debts through reorganization.
Are There Any Situations Where You Cannot File for Bankruptcy?
How often can you file bankruptcy in Texas? As many times as you need to, with one very narrow set of exceptions. In very narrow circumstances we’ll call “rapid fire” bankruptcy, you cannot file a bankruptcy case under any chapter earlier than 180 days after the dismissal of a prior case. Also, you may be barred from filing if ordered by a bankruptcy judge in a motion or order.
Can Businesses File Bankruptcy More Than Once?
A business can file under Chapter 7 – liquidation, Chapter 11 – reorganization, or Chapter 13 –reorganization – bankruptcies. Like an individual, how often can someone file bankruptcy when that someone is business is unlimited, with time limits only imposed for the discharging of debts.
The Law Offices of Kretzer and Volberding P.C. Can Help with Your Bankruptcy Case
When you are trying to figure out whether or not to file for bankruptcy and which type of bankruptcy is best for you, you will need a lawyer with specific experience on bankruptcy in Texas and who has the right knowledge and resources to help you.
Contact the Law Offices of Kretzer and Volberding P.C. today to briefly discuss your case or schedule a free consultation.