Unsecured Creditors and Bankruptcy

Dealing with bankruptcy can be frightening event.  Bankruptcy is meant to give a fresh economic ‘leg-up’ to people who have made some financial errors.  There are two basic types of bankruptcy, Chapter 7, total discharge of debt, and Chapter 13, a reorganization of debt.  There are rules for filing for bankruptcy and conditions must be followed. 

A Chapter 7 case is only available to individuals and the debtor has no liability for discharged debts.  Although the right to a discharge is not absolute, and some types of debts are not discharged.  

Determine Your Eligibility 

Before filing for a second bankruptcy, a debtor must wait eight years after the discharge of the initial bankruptcy charge under Chapter 7 rules.  If a file has been made under Chapter 13, the individual must wait six years before filing an individual, Chapter 7, bankruptcy.  It is important to have the official discharge date of the original debt.  Depending on the type of debt filed Chapter 7 for individuals or Chapter 13, as each has different rules. 

Depending on your situation, bankruptcy may not be an alternative for you.  Prior to filing for bankruptcy a financial management course must be taken and working with a credit counselor is also a requirement.  To prevent filing and re-filing for bankruptcy again and again you must undergo financial counseling.  It is hoped that the counseling will prevent the reoccurrence of future predicaments.   Eligibility can be granted if these requirements are met. 



Engage the services of a specialized attorney to determine your eligibility for filing bankruptcy for a second time.  Bankruptcy may not always be the right road to follow.  Sometimes individuals fail to meet the requirements or have too much income to qualify for bankruptcy.  The median family income is determined on a state by state basis. The attorney will perform tests and determine if your income is too low for the debt your have. 

File the Papers 

You can file your bankruptcy claim through an attorney or a local bankruptcy court.  An attorney is not required, but the process is complicated and time sensitive.  If the deadlines are not met, the case may be thrown out of court. After completion of the papers, and once they have been approved by the court system, the courts will assign a bankruptcy hearing. It usually takes four to six weeks to receive the debt discharge statement.  Under Chapter 7 (Individual) protection, creditors may not proceed with any further claims against you.  Under Chapter 13, there is a repayment plan will be instituted, requiring repayment which may last between two and three years.

Filing for a second bankruptcy may or may not be an option for you. The key is to learn financial lessons and implement them into your daily life to prevent further debt and additional bankruptcies.

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