I've done 4 gallons in a 7 gallon kettle a few times successfully. The overflow I had was doing a porter. But the first 3-4 BIAB I did before getting my current kettle I wanted to do 5 gallons but didn't have the capacity so I'd do 4 gallons and then top it off with clean water extract style. Probably not ideal but it worked. If you want to do BIAB with the equipment you have you can always figure out a way to make it work.A bigger kettle makes it easier, but it is possible to use a smallish kettle.
I started out making 6 ltr batches, using a 9 or 10 litre pot
I now make 10 litre batches using the same pot.
Reason for not changing pot size is that this one fits nicely in my (duvet lined) cooler box for the mash