Too Soon to File for Bankruptcy Again?

Dear Bankruptcy Adviser,

We filed Chapter 7 bankruptcy in 2006. We presently have a lot of credit card debt among some other things that we should not have done. My husband lost his full-time job and is working a temporary job with a huge pay cut. He is going to be laid off for the next two weeks and will hopefully be able to go back after that, but it is iffy. We have gone through all of our extra cash paying bills. Should we try to file for bankruptcy again? We have one child and another on the way. I am really concerned about losing our home and everything.

-Courtney

Dear Courtney,

You say that you have done some things you shouldn't have to get yourself back into this financial headache. I am sorry you didn't learn from your first mistake.

Unfortunately for you, having one child, another on the way and unstable employment is a recipe for financial turmoil and marital acrimony.

While another bankruptcy filing may be around the corner, you can't file Chapter 7 bankruptcy until next year. You can only file Chapter 7 bankruptcy and receive a bankruptcy discharge once every eight years.

While the eighth year is right around the corner, you might be facing creditor lawsuits or pending foreclosure. If you are facing a lot of pressure, you may consider filing Chapter 13 bankruptcy before you become eligible for another Chapter 7.

A Chapter 13 bankruptcy is a repayment of none, some or all of your debt over a three- to five-year period. In some cases, filers could have a payment as low as $100 per month. Most likely, that amount will not pay back much to your creditor, but when you are facing lawsuits, garnishments or bank levies, some sort of bankruptcy protection is needed.

As for your home, you should be concerned. This will need to be a priority for you with your growing family. While you may be dealing with lots of calls from debt collectors, you need not let those calls distract you from trying to save your home.

I strongly suggest hiring a bankruptcy attorney to help field calls from collectors and keep lawsuits at bay. Unless one of the creditors has already filed a lawsuit against you, hiring an attorney should also buy you some time if you wanted to wait until you are eligible to file another Chapter 7 bankruptcy.

It is important to note that hiring a bankruptcy attorney will not slow down the foreclosure process. You would need to work on a loan modification with your lender to slow that process down if you are already behind on your payments.

I would also look into what financial missteps you took to lead you back to the path of bankruptcy once again. While ill-fated job problems can't be helped, taking a hard look at your spending and saving and making a strict budget could alleviate the need for such stressful, drastic measures in the future.

Good luck.

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