Bankruptcy was designed to give people a fresh start with their finances, but there are subtle differences between the options and rules for those facing financial hardship again, after a prior bankruptcy filing.
Having the help of an experienced bankruptcy attorney can clarify the differences between Chapters 7 and 13 of personal bankruptcy law, illuminating a path to solvency.
When Filing for Bankruptcy More Than Once
There is no limit to the number of times a person can file for bankruptcy, but there are guardrails. There is usually a waiting period before additional debt forgiveness can be granted.
Most people file for bankruptcy to have debt discharged or forgiven. Filing a second time, before the discharge is granted under the first bankruptcy, offers little benefit.
Waiting Periods, Chapter 7 vs. Chapter 13
The length of the waiting period between bankruptcy claims depends upon the chapter used previously and the chapter currently under consideration. The waiting period depends on the filing date of the last bankruptcy, not the discharge date.
- Chapter 7 followed by Chapter 7: Eight years must elapse between filing Chapter 7 and filing Chapter 7 again.
- Chapter 7 followed by Chapter 13: Four years must elapse between filing Chapter 7 and filing Chapter 13.
- Chapter 13 followed by Chapter 13: Two years must pass between two petitions for Chapter 13 discharge.
- Chapter 13 followed by Chapter 7: No waiting period if 100 percent of claims were paid under a Chapter 13 bankruptcy and the petitioner subsequently seeks Chapter 7. This also applies if unsecured claims were paid and the court determines it was done in good faith. A six year waiting period can be imposed if those conditions are not met.
What is the Difference Between Dismissal and Discharge?
Dismissal and discharge are not the same. Dismissal happens when the court rejects the bankruptcy petition or the individual withdraws it. Unless the court says otherwise, it may be refiled. The court may impose a 180 day waiting period if the petitioner disobeyed a court order or withdrew the bankruptcy petition after a creditor filed a motion to lift the automatic stay.
South Carolina Specific Considerations
Some bankruptcy rules apply specifically to those filing in South Carolina, such as:
State Exemptions. The state has its own exemption limits that override federal limits, such as for the value of a home, vehicle, and personal possessions.
Inflation-adjusted exemptions. South Carolina state law requires property exemption amounts to be adjusted for inflation every other year. That currently sets the homestead exemption at $76,125 for a single owner and $152,250 for multiple owners (pending July 2026 adjustment). Additional exemptions apply for vehicles, household goods, and in other categories.
Residency. Residency of at least 730 days in South Carolina is required to use the state’s exemptions. If this is not met, the petitioner must file using their previous state’s exemptions.
Credit Counseling. The petitioner must successfully complete a credit counseling class within 180 days of filing. Exceptions may be made for disability, incapacitation, or active duty military.
Means test. The income and expenses of the petitioner are compared to the state’s median income to determine qualification for Chapter 7.
Understanding the Consequences of Multiple Bankruptcy Filings
Credit reports retain records of bankruptcies for 7-10 years (Chapter 13 is 7 years, Chapter 7 is 10 years). Repeated petitions for bankruptcy can make financial recovery more difficult. A bankruptcy specialist from Lam Law Firm can navigate the technical complexities of waiting periods and eligibility to establish a strategy for financial recovery. Call for a consultation today.
