Michigan Bankruptcy Firm

Can You File for Bankruptcy Twice? Three Facts You Should Know
Did you know that 1,261,000 Americans filed for bankruptcy in 2012? It is unfortunate that so many people have to deal with the long term stress of a bankruptcy procedure. On the upside, because so many people go through this process, there is a well-traveled path for others to follow. If you are feeling confused by all the conflicting and complicated information you’ve been receiving about bankruptcy, we’re here to help you out with clear answers to some of the most often asked questions.

1. When is Filing Bankruptcy the Right Option?

Bankruptcy should be your choice only when you have no other avenue for debt repayment. If you have already taken the steps of trying to negotiate payment plan structures with creditors, then it might be time to file, before things continue to escalate. Most people do not end up bankrupt as a result of fiscal irresponsibility. In fact, over 90% of filers say that medical expenses, job loss, or divorce were contributing causes.

2. Can You File for Bankruptcy Twice?

Yes, you can, though your choices are a little more complicated than the first time around. For every type of bankruptcy there are a number of years that must pass before you can file again. For example, Chapter 7 bankruptcy requires an eight year wait. If you need to file before that and cannot wait, then you will need to file a Chapter 13 bankruptcy instead. Although you can file a Chapter 13 at any point, if you do it less than four years after a Chapter 7, you will not receive a discharge of your debt. The point in this case would be to simply get a restructured payment plan, receive protection from creditors, or remove a second mortgage from your home.

3. But What’s the Difference Between Chapter 7 and Chapter 13?

Good question. Basically, filing Chapter 7 Bankruptcy means you are agreeing to liquidate a portion of your assets, such as real estate, in order to pay for some of your debt. Chapter 13 Bankruptcy, conversely, is a debt restructuring process. Most people end up opting for Chapter 7, since it discharges most unsecured debts, although it will stay on your credit history for a total of 10 years, which is three years longer than with Chapter 13.

Do you have experience filing bankruptcy? Tell us what you’ve learned in the comments