After you declare Chapter 7 bankruptcy, you get a clean slate to start over. If you file a Chapter 13 bankruptcy, you get the opportunity to reorganize your debt and slowly pay off creditors. However, it can be easy to fall back into debt. Statistics show that between 8% and 16% of all bankruptcies filed are repeat filings. Although no one wants to declare bankruptcy, it would appear that filing a second bankruptcy can happen all too often.
How Often can I File Bankruptcy?
There are limits to how often debt can be discharged through bankruptcy. Time is determined based on the filing date of your previous bankruptcy:
- Chapter 7 bankruptcy followed by another Chapter 7: Eight years
- Chapter 13 bankruptcy followed by another Chapter 13: Two years
- Chapter 13 bankruptcy followed by a Chapter 7: Six years, but sooner if you paid off your unsecured creditors in full, or at least 70% of the claims and your plan was made in good faith.
- Chapter 7 bankruptcy followed by Chapter 13: Four years
Although you may be eligible to file a second bankruptcy, it does not mean that it is your best option. Instead, consider taking the following steps to keep you from needing to file a second bankruptcy:
- Pay Off All Credit Cards Every Month: After receiving a bankruptcy discharge, you may be bombarded with credit card offers. To rebuild your credit, you will need to show that you can repay your debts, however, the last thing you need to do is build up revolving credit card debts. If you do obtain a credit card, be sure to pay it off monthly. Having high credit card debt is a common cause of bankruptcy.
- Do Not Purchase a House Above Your Means: Many bankruptcies are due to the inability to pay a home mortgage. If you have just been through a bankruptcy, do not overextend yourself with a house that is too costly for your budget. Finding an affordable house can be difficult, but consider a home outside of your desired geographic location. Some of these areas are just as nice, but not as popular, which means they are often more affordable.
- Have an Emergency Fund: Sudden expenses are often a cause of bankruptcy. Try to keep an emergency fund that will cover three to six months of your expenses.
- Create a Budget and Stick to it: To obtain control of your spending and reduce your costs, you need to know where your money goes. Consider consolidating debt at a lower rate, particularly for student loans and credit card debt. If you are unable to create a budget on your own, consider seeking professional assistance.
- Rethink Your Income: If you are in trouble financially, consider a second job. Many people turn to income supplements like Uber or Etsy to add a bit of extra income each month.
Contact an Experienced Bankruptcy Attorney
If you are not sure if bankruptcy is the right option for you, whether it is your first bankruptcy or not, contact the attorneys at Bankruptcy Law Center today. We will help you better understand your options and come up with a plan to help you get back on your feet financially.