Over the past two years, millions of Americans have ended up filing for bankruptcy as a way out of unmanageable debt. In the past, there were a few basic reasons why someone would file for bankruptcy. The typical was unemployment, a prolonged medical illness, a family breakdown that ended in divorce and that was the majority. There were quite a few serial bankruptcy filers in the past and that is why Congress found it necessary to renew the bankruptcy code in 2005. Before 2005, there was a small group of people who would file for Chapter 7 bankruptcy, reestablish their credit, and they would run up their credit cards just in time to present them again after the seven-year mark. The last 10 years have been monumental in how things have changed, including in the field of filing for bankruptcy. Before the 2008 economic collapse, creditors freely extended credit to anyone who asked for it. People had credit cards with a $50,000 limit and there was really no way to pay it back. No wonder how this ended in such a disaster. In the immediate aftermath of the crisis, creditors scrambled to wipe out large available balances to protect their assets, but now they had begun to loosen up again. This is one of the reasons why the number of people filing for bankruptcy has decreased. First, the banks have slowed down their foreclosure proceedings because the housing market is in the tank and they would take too big of a hit if they had to sell the property now. With more credit released, people can get a little further down the road and postpone filing for bankruptcy. Many believe this is a precursor to the creation of a giant bubble.
Credit card debt has not only risen to $800 billion nationally, but student loan debt has now surpassed $1 trillion. People continue to work without realizing what is really happening. There is a large group of people who filed before the Chapter 7 bankruptcy deadline before the bankruptcy code changes in 2005. This group is rapidly approaching the possibility of filing Chapter 7 bankruptcy again. After the changes to the bankruptcy code, one can file for Chapter 7 bankruptcy every eight years. The term begins the day of the bankruptcy declaration. Add to this, high unemployment, and credit beginning to dry across the country, and the US has a credit cocktail ready to explode. For most people, there will be no other option but to file for bankruptcy. It’s true that everyone should avoid filing for bankruptcy at all costs, but in today’s dire circumstances, it may not be possible. The last thing a bankruptcy attorney likes to see is the second filer walking into their office.
For someone who needs to file for bankruptcy again, here is the summary of when you can do it.
A person can file Chapter 7 every eight years from the date of filing bankruptcy. Then, after a Chapter 7 bankruptcy discharge, a person can file Chapter 13 after four years. And for those who are in the process of filing for Chapter 13 bankruptcy, they can file for Chapter 7 bankruptcy at any time, as long as they qualify and can no longer afford the Chapter 13 repayment plan. And finally, one You can file another Chapter 13 two years after the previous bankruptcy filing.
All of this is subject to change and for someone with financial problems it is important to consult a bankruptcy attorney immediately to discuss your options. Waiting will only cause more financial damage and take longer to recover.