Filing for bankruptcy is often a last resort for people who want to reclaim their financial future. If you’ve previously filed for bankruptcy and find yourself in dire financial straights again, you may want to file for bankruptcy protection again.
While it’s possible to file for a second bankruptcy, you’re going to have to meet strict waiting periods and filing requirements. Understanding them will help you to determine if this is a viable option for regaining financial stability.
Longer waiting periods between filings
One of the biggest hurdles for individuals considering a second bankruptcy is the mandatory waiting period between filings. You have to wait eight years after one Chapter 7 before you can file the same type of bankruptcy. A Chapter 7 after a Chapter 13 features a waiting period of six years or until the repayment plan from the Chapter 13 is completed. If you’re considering Chapter 13 after a Chapter 7, the waiting period is four years, but a Chapter 13 after a Chapter 13 only has a two-year wait. The waiting periods for filing a second bankruptcy are in place to ensure that a new filing is being used as a true last resort to debt-related struggles.
Impact on credit and financial recovery
A second bankruptcy will have a severe impact on your credit score, and it may be worse than the first time around. Since bankruptcy stays on your credit report for up to 10 years, a second filing can extend the time you’ll have to deal with the repercussions, making it more challenging to secure loans, rent property or even get a job. Financial recovery after a second bankruptcy may take longer and be more difficult. It is certainly not an impossible undertaking, but it is a reality worth keeping in mind.
Limited protection from creditors
Filing for bankruptcy generally results in an automatic stay, which temporarily halts most collection activities. However, in the case of a second bankruptcy, especially if filed within a year of a previous case, this protection may be limited or even denied by the court. Creditors might be able to proceed with collections or foreclosures, which could leave you with less relief than you might expect.
Filing a second bankruptcy is challenging, partly because of the limitations that come with this process. You should ensure you understand exactly what steps you need to take. Working with a legal representative who’s familiar with second bankruptcies may help to make the process less stressful and more successful for you.
