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Is a second bankruptcy possible if your finances don’t improve?

On Behalf of | Jan 25, 2023 | Bankruptcy

Bankruptcy can serve as a quick and effective solution to aggressive collection activity. Creditors have to stop calling you all the time and dismiss any pending lawsuits against you. You can protect your property from repossession or foreclosure after it’s as well with the automatic stay. The discharge of your unsecured debts will also help you by reducing your future financial responsibilities.

Unfortunately, bankruptcy can help solve some of your debt issues but not necessarily the underlying issue causing your financial hardship. If issues with employment or health concerns continue to affect your finances, you may eventually find yourself struggling with debt again and in need of support long after your discharge.

Is it possible to file for bankruptcy a second time after receiving a discharge previously?

There is a waiting period after each bankruptcy

In theory, an individual could file for bankruptcy repeatedly throughout their life if they never managed to correct their financial issues or continue to experience misfortune with their investments or health. There is no actual limit to the number of bankruptcies an individual can seek.

Instead, there is a mandatory cooling-off period following someone’s successful bankruptcy. After your discharge, you will have to wait a specific number of years before you can file for bankruptcy again. If your last bankruptcy was a Chapter 7 filing, you will have to wait for at least eight before filing for Chapter 7 bankruptcy again. If you want to file for Chapter 13 bankruptcy this time, you only have to wait for four years.

If you previously filed for Chapter 13 bankruptcy and need chapter 13 proceedings again, you could file after just two years. If you now qualify for a Chapter 7 bankruptcy instead, you may need to wait for six before you file.

Given that every bankruptcy will eventually come off of your credit report, you don’t have to worry about employers or lenders automatically uncovering repeated bankruptcies and thereby denying you credit after a second bankruptcy. You will still have opportunities to rebuild your finances after bankruptcy even if you have received a discharge previously.

A careful approach to the process can maximize the benefits

Especially if your previous bankruptcy did not fully resolve your financial issues and you tried to handle it alone, you may recognize the value of bringing in professional help for a subsequent bankruptcy filing.

Those who have complicated financial circumstances or who worry about creditors initiating special proceedings during their bankruptcy will benefit from professional representation throughout the process. Understanding the rules that limit bankruptcy filings can help you evaluate your current options.

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