Managing debt problems can feel like a never-ending battle. This is especially true if one has already gone through a debt solution, such as filing for bankruptcy. This can make the individual feel helpless and like one must live in debt the rest of his or her life. Fortunately, this is not true. It is possible to file for bankruptcy again; however, it is important to understand the eligibility for it and how it could impact one’s credit.
Filing for bankruptcy again
In general terms, a person can file for bankruptcy as many times as they need to in their lifetime. While there is no limit to the number of times an individual can file, there are time limits set between each filing. Additionally, one may not receive any debts discharge when they file, so it is important to understand these time limits.
Time limits
When an individual files a Chapter 7 bankruptcy, he or she must wait 8 years before filing for another Chapter 7 bankruptcy. However, if they seek to file for a Chapter 13 bankruptcy following a Chapter 7, he or she needs to wait only four years.
With regards to a Chapter 13 Filing, if the individual seeks to file for Chapter 7 after this filing, a time span of 6 years must occur. This could be shortened if the repayment plan set in the Chapter 13 filing has been paid in full. Finally, if an individual seeks to file a Chapter 13 following a Chapter 13, they must wait two years to do so.
Switching filings
There are benefits for switching filings. When one switches from a Chapter 7 to a Chapter 13 this could help one create a repayment plan for the debts not discharged by the Chapter 7 filing. Switching from a Chapter 13 to a Chapter 7 could reduce the waiting period if the unsecured debt is paid back in full. Additionally, one may only need to pay back 70% of unsecured debt to be eligible for another filing. Finally, repeating a Chapter 13 filing could help manage certain debts, such as student loans or tax debts, which cannot be discharged.
Seeking debt relief through a personal bankruptcy filing can be very helpful for an individual. This could be the opportunity for a fresh financial start, making it imperative that one take the time to understand the process and what life after bankruptcy would look like whether it is their first filing or second.