How Soon Can I File Bankruptcy Again After Discharge

Bankruptcy is a scary word — it drums up horror stories of business concern giants tumbling from grace or gossip magazine headlines shaming celebrities for mismanaging their funds. Simply declaring bankruptcy doesn't mean you are a failure or deserving of ridicule. Defalcation is simply when yous owe more than yous tin beget to pay and it's very mutual — in 2012, over 1.ii million Americans filed for bankruptcy, according to estimates from Epiq Systems.

The two most common types of consumer bankruptcy are Chapter vii and Chapter 13. Affiliate 7 bankruptcy liquidates all your non-exempt assets to pay off creditors. It tin can exist a expert choice if yous take large amounts of unsecured debt, similar credit carte debt. Chapter 13 bankruptcy reorganizes your debts and puts y'all on a payment plan, and can be a good pick if you desire to concord onto certain not-exempt avails or avert foreclosure on your abode.

In many ways, filing for bankruptcy tin can exist viewed as a business decision — and in the business of life, sometimes you become into tough fiscal situations. Declaring bankruptcy tin eliminate certain debts, free upward funds and assist you go a fresh start, simply that doesn't hateful yous should run off and file when you get in a financial bind — the consequences of declaring bankruptcy can be felt for years. It'southward a serious decision that shouldn't be taken lightly.

So how do you know when it'southward fourth dimension to file? Here are v circumstances when declaring bankruptcy makes sense.

Read everything yous need to know about bankruptcy hither>>

1. You Are a Senior Citizen With No Income and a Lot of Debt

More than and more senior citizens are filing for bankruptcy due to decreasing pensions and the rising cost of health care. A 2010 report by John Pottow, a Michigan Law School Professor, found that seniors are the fastest-growing group of bankruptcy filers. Filing for defalcation can make sense for many seniors, especially since they usually live on a fixed income and don't work.

Yet, senior citizens must pass a bankruptcy exam to authorize, which compares your boilerplate monthly income confronting the land median. If your income is too high, due to your alimony or other income, you lot could exist ineligible. Luckily, any Social Security benefits you receive don't count every bit income and almost all tax exempt accounts, like 401(k)s, 403(b)s, profit-sharing, coin buy and divers-benefit plans, are exempt in defalcation.

IRAs and Roth IRAs are besides protected up to $1,245,475 (this number is adjusted every three years — it was last gear up in 2013). To be on the safe side, seniors looking to file bankruptcy should go along their Social Security money in a separate account and let creditors know in writing that the funds in that business relationship are all from Social Security.

Since many senior citizens count on their home disinterestedness to fund their retirement, they need to make sure that'south also protected under bankruptcy law. Many states, equally well as federal defalcation exemptions, offering people filing bankruptcy a homestead exemption to protect a portion of their abode equity, and some states even have higher exemptions only for senior citizens. Check your state's homestead exemption laws before because filing for defalcation.

2. You Can't Pay Your Medical Bills

Co-ordinate to a study by NerdWallet Health, unpaid medical bills are expected to surpass credit bill of fare and mortgage debt as the leading crusade of bankruptcy filings. Medical debt doesn't only affect the uninsured — one expert estimated 78 percent of people that file for defalcation due to medical bills had wellness insurance. co-ordinate to Fox Business concern.

Co-pays, special treatments, co-insurance and fourth dimension off work contribute to the costs of medical intendance and tin easily button someone with health insurance into debt. For the uninsured, a pocket-size medical procedure or simply paying for prescriptions out of pocket can rack upward huge amounts of medical debt, too.

Filing for defalcation tin can eliminate all your medical bills, but just former debts will be discharged. If yous incur more than medical debt subsequently filing, you will still owe on the new debt. Brand sure all your medical bills and debts are accounted for earlier filing — and if you know you lot're going to rack upwards more medical bills, consider waiting to file so you can include all your debts.

Read: How I Went From Man of affairs to Bankrupt and Back Again

3. You Are Drowning in Credit Bill of fare Debt

If y'all can just brand minimum payments on your credit cards and are using credit to pay for basic necessities, information technology might be time to declare bankruptcy. Earlier making the conclusion, accept inventory of all your assets: depository financial institution accounts, retirement funds, investments, real manor, cars and anything else of pregnant value. Then add up all your debts. If your debts are more than the value of your avails, declaring bankruptcy might be the right selection.

Before y'all file, a word of alert: Don't run out and spend with wild carelessness before y'all declare bankruptcy. Charging up your credit cards right before filing tin be ruled as fraud past the courts and that debt won't be discharged.

iv. Your Ex Simply Declared Bankruptcy — and You Can't Pay the Debt

Getting divorced can be financially devastating — you can be left with massive legal fees, unpaid bills and a lot of debt. If you leave your wedlock with debt that is only in your name, filing for bankruptcy can offer some much-needed relief, only things aren't always and then cut and dry: If the debt is in both your and your ex-spouse'southward proper noun, y'all might both need to declare bankruptcy.

If yous have debt in both your names and your ex-spouse declares bankruptcy, creditors can still collect from you. Even if the divorce settlement states your ex is responsible for the debt and he declares defalcation, the debt cannot be discharged and the creditor can even so come up after you for payment. It's of import to understand that the divorce settlement doesn't remove anyone's personal responsibleness to pay; it only forces the other spouse to pay the debt.

Filing joint bankruptcy will eliminate everyone'south responsibility to pay, which is why it sometimes makes sense for both spouses to declare defalcation and discharge all joint debts.

Read: How to Perfectly Plan Your Divorce to Protect Your Assets

5. Y'all Are Unemployed and Deep in Debt

If yous have been unemployed for an extended menstruation of fourth dimension and take no financial resources to fall back on, declaring bankruptcy can assistance keep you afloat until you find a new job. This decision should be weighed carefully, though; some employers conduct credit screenings equally part of a background cheque and bankruptcy is so damaging to your credit, it could injure your chances of landing a job.

Still, being unemployed can make the process easier, because your income is probably close to or below the median income requirement in your land for Chapter 7 bankruptcy. If you don't qualify for Chapter 7, yous can expect into filing Chapter 13 bankruptcy, but since you are unemployed, it'south possible you tin can't beget the repayment plan and the courtroom volition dismiss your case.

Photo credit: Michael Coghlan

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