Can You File for Bankruptcy More than Once?

It is possible to file for bankruptcy more than once in a lifetime. If you have filed for bankruptcy in the past, you are aware of the significant problems it can cause. Your credit score drops, your assets may be sold and it can take years of your life to officially close a bankruptcy. However, sometimes filing for bankruptcy is a necessary protection. Those borrowers who can no longer handle the day-to-day living expense of their lives and still meet debt obligations may need to consider filing more than once.

Credit Effect of a Second Bankruptcy

Your credit score will take a serious hit with a second bankruptcy. You will basically be wiped out of any possible positive credit information you recorded between your bankruptcies. However, when compared with the possibility all of your debts would go to default and you would be sued by multiple creditors, a bankruptcy may be preferable. If there is no way to prevent default, meaning you have exhausted all modification and settlement options, you may actually be preserving your credit by filing.

Cost of a Second Bankruptcy

Bankruptcy results in fees and costs to courts and a lawyer. You will also have to come up with the cash to cover your remaining debt burdens as decided by the court. This means liquidating assets or submitting to wage garnishment. While the cost is extremely high, it can again be preferable to allowing debts to continue in the defaulted stage for months or years. Once you have determined you cannot reasonably repay your debts, you will only rack up interest rates and fines by ignoring creditors. Bankruptcy is preferable at that time.

Discharges in a Second Bankruptcy

If you have decided to shoulder the credit impact and cost of a second bankruptcy, do not expect your debts to be discharged as easily as they were in the first. You will find the trustee appointed to you is less willing to accept your explanation of default than he or she may have been in your first case. Unless a very tragic and unpreventable emergency has occurred, the trustee is more likely to assume you manage your debt poorly than you are a victim of circumstance.

Recovering from a Second Bankruptcy

You recovered from your first bankruptcy well enough to take on debts again. Unfortunately, those debts forced you into bankruptcy a second time. This means you are starting from scratch, and recovering this time will be even harder than it was in the first. Most home lenders will not consider providing you a loan at any point in the future if you have declared bankruptcy twice. It can be hard to even secure a modest personal loan or vehicle loan at this point. A second bankruptcy can even limit your ability to lease a car. This means you will need to simply save up cash yourself when it is time to make a large purchase. You will likely need to provide at least a 50% down payment on any loan, including a very pricey home loan, to acquire a new asset with debt.


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