The personal bankruptcy process was designed to help those in financial trouble who were unable to dig their way out of overwhelming debt. For some, claiming bankruptcy can wipe their financial slate clean, providing them with the opportunity to start again. Unfortunately, going through the process of personal bankruptcy does not necessarily mean that you will be financially stable from that point onwards. Some people do find themselves in financial difficulty again at some point following their first bankruptcy petition. If you find yourself in this situation, you may wonder how often you can file bankruptcy Chapter 7. The truth is that you can file for bankruptcy as often as you like, but it might not have the same benefits for you as it did the first time.
There are two chapters of the U.S. Bankruptcy Code that individuals often use to petition personal bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is definitely the cheapest, easiest, and most common. It uses liquidation as a means of paying back creditors, but does not guarantee that they will receive all the money that is owed to them. After you have filed the petition, a court-appointed trustee will assume control of any non-exempt property and use it to pay off a portion or all of what you owe. Since an automatic stay accompanies your bankruptcy, you will no longer be harassed by collections, wage garnishment, or unhappy creditors. At the end of the process, if everything has gone smoothly and no creditors have objected, your eligible debts will be discharged and you will be free to do as you please.
It has now become law for anyone filing bankruptcy to complete a financial management course following the bankruptcy proceedings. This is designed to help educate those who have a record of making poor financial decisions with the intention of ensuring they will not find themselves in this position again. Unfortunately, situations such as unemployment, illness, and other unavoidable factors, may result in you having to file bankruptcy a second, third, or even fourth time in your life.
You can file bankruptcy Chapter 7 as often as you like but unless you wait a minimum of 8 years from the date you filed your last petition, you will not have your debts discharged. If you are within this time frame, it might be best to consult a qualified bankruptcy attorney who will probably advise you to file under Chapter 13 instead as the waiting period is only 4 years. The lengthy 8-year waiting period does not apply to anyone who filed a petition but then had it dismissed. For that you will only be required to wait 180 days, from the date of the initial filing.
Filing bankruptcy Chapter 7 multiple times may seem like a good idea if you have waited 8 years and are able to get your eligible debts discharged, but you must take into consideration the effect it will have on your credit rating. Bankruptcy can stay on your credit history for up to 10 years, making it difficult to qualify for a mortgage or other type of personal loan, rent accommodation, or even receive promotions at work. Multiple bankruptcies will make it very difficult for you to raise you credit score and will result in very high interest rates on everything from credit cards to car leases. If you have already filed Chapter 7 and are thinking about doing so again, consult a bankruptcy attorney to find out what the best options are for your individual situation.
To find out if bankruptcy is right for you, please fill out our free bankruptcy evaluation.