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Bankruptcy serves an invaluable role in maintaining a stable economy. It gives entrepreneurs the encouragement to start up businesses and it allows people who have fallen into debt to start fresh and continue to contribute to the economy by working and purchasing rather than sitting in jail. The other great thing about bankruptcy is that many who experience it, learn from it and are made better by it. Unfortunately, there are many who find themselves in a tough financial spot again after bankruptcy and wonder if they can file again. Bankruptcy may still be an option for these people, but is it the best one. Individuals who end up in debt again after bankruptcy need to ask some tough questions.

How did this happen?

If you are facing bankruptcy for the second time (or third or fourth), you need to take a close look at your financial life and ask how this has happened. Some factors that lead to bankruptcy can’t be controlled. A person, despite all their efforts to control their spending and save money, may still lose their job or have a medical emergency. But more likely, people facing bankruptcy for a second or third time have some bad financial habits that need to be broken. Bankruptcy may temporarily improve a bad financial situation but if there’s the underlying habit of overspending, financial hard times will still be in your future.

A waiting period

In order to prevent people from abusing bankruptcy by repeatedly racking up debt and discharging it, the bankruptcy code has a minimum time period between bankruptcies. For a Chapter 7 bankruptcy, the most common type, the time period is 8 years. If a person in need of bankruptcy is close to that 8 year mark, they can look into filing for bankruptcy again. If it’s still a few years off, another option is a Chapter 13 bankruptcy in which a person’s debts are reorganized. The debtor is given anywhere from 3 to 5 years to at least pay off some of their debt. Payments are broken down to manageable monthly payments.

Whatever option you choose, hiring a bankruptcy attorney can be beneficial. Not only can they help keep creditors at bay while you consider your options, but they can suggest different options that might be best for your situation. So if you’re considering bankruptcy, and not for the first time, it might not be a bad idea to consult an attorney.

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