Over the last couple years, millions of Americans have ended up filing bankruptcy as a way out of unmanageable debt. In the past, there were some few basic reasons of why someone would file for bankruptcy. Typically it was unemployment, a prolonged medical illness, a family breakup that ended up in divorce and that was the majority. There were quite a few serial bankruptcy filers back in the day and that's why Congress felt it necessary to revamp the bankruptcy code in 2005. Prior to 2005, there was a small group of people that would file Chapter 7 bankruptcy, reestablish their credit and run up their credit cards just in time to file again after the seven-year mark. The last 10 years have been monumental on how things have changed, even in the bankruptcy filing arena. Prior to the economic collapse back in 2008, creditors were freely giving out credit to anyone who asks for it. People had credit cards with a $50,000 limit on it and really no way of ever paying it back. It's no surprise of how this ended in such a disaster. Immediately following the crisis, creditors were quick to remove large available balances to protect their assets, but now had begun to get slack again. This is one of the reasons why the number of those filing bankruptcy has declined. First, the banks have slowed down their foreclosure proceedings because the real estate market is in the tank and they will take too big of a hit if they were to sell property now. With more credit being freed up people are able to kick the can down the road a little bit further and hold off on filing for bankruptcy. Many believe this is a precursor to a giant bubble being created.
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Not only has credit card debt risen to $800 billion nationally, student loan debt has now surpassed $1 trillion. People just keep plugging along not aware of what's really going on. There is a large group of people that got in under the deadline to file Chapter 7 bankruptcy prior to the changes of the bankruptcy code back in 2005. This group is quickly approaching the ability to file Chapter 7 bankruptcy again. After the changes the bankruptcy code, one is able to file Chapter 7 bankruptcy every eight years. The timeframe begins the day of the bankruptcy filing. Add to this, high unemployment and credit starting to dry up nationwide, the US has a credit cocktail ready to explode. For most people there'll be no other option but to file for bankruptcy. It is true, that everyone should avoid filing bankruptcy at all costs, but in today's extreme circumstances it just might not be possible. The last thing a bankruptcy attorney likes to see is the second time filer walking into their office.
For someone that needs to file bankruptcy again, here is the rundown of when you can.
A person can file Chapter 7 every eight years from the date of filing bankruptcy. Next, after a Chapter 7 bankruptcy discharge a person can file Chapter 13 after four years. And for those that are in the process of filing Chapter 13 bankruptcy, they can file a Chapter 7 bankruptcy at any time as long as they qualify and no longer can afford the Chapter 13 payment plan. And lastly, one can file another Chapter 13 two years after the previous bankruptcy filing.
All of this is subject to change and for someone in financial trouble it's important to immediately consult a bankruptcy attorney to get their options. Waiting around will only cause more financial damage and take longer to recover.
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