Let’s say you use Chapter 7 bankruptcy when your debt becomes overwhelming. You need that fresh start. The debt wasn’t your fault — your company went under and you lost your job — but you still had to do something about it. You used bankruptcy to eliminate it.
However, that wasn’t the end of your financial troubles. A few years later, you see the debt starting to mount once again. How often can you declare bankruptcy to take care of it?
If you used Chapter 7, you must wait eight more years. That doesn’t start at the time of the discharge, when the case closed, but at the time of the filing. So, in reality, it may be more like seven years and a number of months since your debt was eliminated. But it’s easier to just think of the filing date and count off eight years from that point.
That said, you may be able to use Chapter 13 without waiting for those eight years. If you’re eligible and it hasn’t been long enough for Chapter 7 anyway, Chapter 13 gives you a faster option to reorganize your debt. You do still have to pay back a portion of that debt on a repayment plan, so it’s not the same as Chapter 7, but it may still help you get things back on track. Being able to utilize it years earlier may also help you address it when you really need to do so.
With any bankruptcy filing, it is crucial that you understand the legal options that you have and all of the steps you’ll need to take.