Does Filing for Bankruptcy a Second Time Make Sense?
Financial difficulties can crop up at any moment. Many Americans seem to experience at least one crisis every decade, and they might consider filing for bankruptcy.
But what happens if you already filed for bankruptcy once before? The good news is that there is no rule preventing people from filing for bankruptcy a second (or even third or fourth) time. However, you still need to qualify. And you should absolutely analyze whether there is an underlying issue that continues to cause you to feel financial stress.
How Much Time Has Passed?
You can file for a second bankruptcy, but you can’t do so immediately after completing the first. Instead, the bankruptcy code will require that you wait a certain amount of time:
- If you received a discharge from a Chapter 7, then you must wait 8 years from the date you filed your first case to receive a discharge in a subsequent Chapter 7
- If you received a Chapter 13 discharge, you must wait at least 6 years from the date you filed your Chapter 13 to receive a discharge in a subsequent Chapter 7
- If you received a Chapter 7 discharge, then you must wait four years from the date you filed to receive a discharge under a Chapter 13
- If you received a discharge for a Chapter 13, you must wait at least two years from the date you filed the first Chapter 13 to receive a second discharge under Chapter 13
If you did not receive a discharge in your first bankruptcy, then other rules might apply.
Can You Discharge Your Debts?
Not all debt is dischargeable in bankruptcy. In particular, secured debts cannot be eliminated. Instead, the lender will still have a security interest in the property, which means they can still foreclose on you. For this reason, you can’t avoid a home foreclosure forever with bankruptcy.
The easiest debts to discharge are unsecured debts, such as:
- Credit cards
- Medical debt
- Personal loans
Go through your debts and see how much you can eliminate. It might turn out that most of your debt is not dischargeable. In addition to secured loans, other debts you cannot eliminate are most student loans, child support, and alimony.
Analyze the Underlying Financial Problem
Having already gone through bankruptcy, you should have gotten your financial problems under control. The fact that you are on the edge of a financial cliff for a second time is certainly concerning. Nevertheless, there are some valid reasons to be facing financial difficulty, such as a sudden illness.
However, you might be facing financial difficulty because of a lack of income. If this was the reason why you filed for bankruptcy the first time, then you need to seriously address how to make more money. Consider getting more education or picking up a second job. If those are not options, then you will need to consider drastically cutting expenses. A life of periodic bankruptcies is very expensive, so you need to finally address the reason why you face chronic financial stress.
Considering Bankruptcy a Second Time? Call Us
Filing for bankruptcy is not a decision to make lightly—whether this is your first filing or a subsequent one. Among the key issues to consider is how your credit will be affected and whether you can manage your debt using other techniques. At Nowack & Olson, our Plantation bankruptcy attorneys will talk about your options, including whether you should not file for bankruptcy. For more information, please contact us to set up a free consultation.