Recently on our bankruptcy forum a user asked, “I filed Chapter 7 bankruptcy 2 years ago. Unfortunately, within a year I was facing another financial crisis. Now I have an unsecured personal loan for $10,000, credit card bills exceeding $10,000, and a variety of store credit cards with balances from $50 to $500. I have worked consistently over the last 2 years, but I only make about $500 per week. Now I am behind on my loan payment and my credit cards and facing another financial crisis. What are my options? Can I file for bankruptcy again?”
Bankruptcy filing is not the solution for your financial crisis
While many debtors file bankruptcy because they have no other choice after a financial crisis such as an unexpected death, divorce, or medical crisis, other debtors simply have not learned to live within their means and continually make purchases they cannot afford. Still other debtors generate so little income each month that they have difficulty meeting their basic needs without creating debt.
Without more information, it’s tough to say for sure which category you might fit, but if you are a single person making $500 per week you should be able to meet your most basic needs of clothing, food, and shelter (assuming you live in an area with low housing costs and you have learned to be extremely frugal).
Can you file for bankruptcy again?
Without discussing whether filing bankruptcy again is a good idea or not, let’s discuss the law. If you filed for Chapter 7 bankruptcy two years ago you must wait at least eight years from the date you filed your previous Chapter 7 Bankruptcy case and received a discharge before you can file another Chapter 7 Bankruptcy case.
With that in mind, filing bankruptcy is not an option for you to resolve your current financial crisis. Let’s take a look at some of your other choices.
- Analyze your income and expenses.
First, from what you described, it sounds like you might have a problem managing your credit and living within your means. You can file bankruptcy a dozen times, but if you keep spending more than you make you will never be out of debt.
What do you do? Find out how you are spending your money. You will need to track your income and every single purchase you make. Next, you will need to create a budget. If you find that your income is less than your most basic expenses (i.e. food, clothing, and shelter) you will need to either increase your income or decrease your expenses.
- Use only cash for your purchases.
Next, you will need to move away from credit cards to a cash only system. Think of the days before credit cards. If you do not have the cash, you cannot buy the item. Some financial experts suggest creating envelops for different spending categories, but there are any number of systems you can use to organize your spending.
- Think about getting another job or getting a better job.
Finally, if you cannot repay your debts or lower your expenses the only option you might have is to increase your income. While no one wants to work two jobs or go back to school to get additional training to find better employment, it might be your only option.
You cannot declare Chapter 7 Bankruptcy again for many years. In the meantime, however, you will need to do something aggressive to ensure you can pay your bills and avoid wage garnishments, property repossessions, property liens, and bank account levies.
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