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What happens when debt piles up again after bankruptcy


To many Tennessee residents, bankruptcy is a huge financial wake-up call. The extreme humiliation, creditor harassment and drastically reduced credit score that goes along with it is typically enough for someone to take steps to prevent it from happening again. However, some people don't learn from their financial mistakes the first time around. What happens when the debt piles up again just a few years later? Is another bankruptcy possible?

Some people continue to live way beyond their means. An inconsistent job market can cause people to lose their jobs. They may continue to have children despite being unable to pay their bills. These situations can all lead to another bankruptcy.

For those in extreme financial situations, a Chapter 7 bankruptcy can be filed every eight years. If eight years is too long for someone to wait, there is the possibility of filing a Chapter 13 bankruptcy during that time. A Chapter 13 bankruptcy allows a person to repay the debt over a period of time - typically 3-5 years. The payments may be very low - around $100 a month - but it at least offers some protection when a person is facing lawsuits and bank levies.

In cases of extreme debt and bouts of unemployment, saving a home should be a person's top priority. If mortgage payments are past due, then the home could be at risk for foreclosure. Homeowners in this situation should contact their lender to discuss options such as loan modification programs.

Bankruptcy is a good way for a person in serious debt to make a fresh start. However, the process should not be abused. Consumers need to take responsibility for their financial actions and work hard to live within their means and save money for the unexpected.

Source: FOX Business, "Too Soon to File for Bankruptcy Again?," Justin Harelik, Aug. 14, 2013

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