When you file for bankruptcy, the automatic stay goes into effect. This is a legal order that stops your creditors from continuing their efforts to collect the debt you owe them. It is your chance for a “breather,” a bit of relief from their collection attempts as you organize your bankruptcy case and begin the process of repaying and discharging your debt.

There are two notable exceptions to the automatic stay: child support and spousal support payments. When you file for bankruptcy, you must continue to make these payments.

Credit card debt is one of the most commonly reported reasons why individuals file for bankruptcy. Credit cards make it easy for users to lose track of how much they spend, causing them to accrue large debt balances. One reason for this is that credit cards can make an individual feel like he or she has more disposable income than he or she actually has. Another reason is that many people harbor misconceptions about credit cards and debt, sometimes misunderstanding critical information until they are taught the truth about credit and debt as part of their required credit counseling for filing for bankruptcy.

A common misconception about credit cards is that carrying a balance on a card increases the user's credit score. Technically, “carrying a balance” refers to any point in time that the user has unpaid charges on his or her account. Colloquially, the term is used to describe the practice of paying off less than the amount billed each month, thereby “carrying” unpaid charges into the next billing cycle.

Carrying a High Balance to Raise your Credit Score is a Fallacy

There is no limit to the number of times you can file for bankruptcy. When your personal debt amount reaches a level where it is impossible for you to pay it down yourself, Chapter 7 and Chapter 13 bankruptcy are there for you to use to have your debts discharged under court supervision. If you have completed a bankruptcy case before, you know that it can be a difficult process that requires you to cede a significant amount of control to the court. You are also aware of the repercussions that a completed bankruptcy case has for your credit. Even knowing this information, you might still be considering filing for bankruptcy a second time. If you are eligible to do so, consider making this move.

Determining When You Can File for a Second Bankruptcy

Your second bankruptcy cannot immediately follow your first. The chapter of your first and your proposed second bankruptcy determine when you can file your second case.

Many Illinois cities are facing financial difficulties that can potentially be resolved through bankruptcy. According to the policy nonprofit Manhattan Institute, this is exactly what needs to happen. When a municipality is unable to pay back its debt, it may file for Chapter 9 bankruptcy, which allows certain contracts to be broken so the intervening trustee can reallocate money to help the municipality repay its debt. Illinois is not a stranger to this type of bankruptcy; since 1988, three cities in the state have filed for Chapter 9 bankruptcy. This number could have been higher if the Illinois Financially Distressed City Law, an act that created a system that allows financially struggling cities to seek loans, bonds, and financial oversight from a state board in order to avoid bankruptcy, had not been passed in 1990.

How Can a City File for Bankruptcy?

If you are facing an insurmountable level of personal debt, filing for Chapter 7 or Chapter 13 bankruptcy might be the most effective way for you to eliminate that debt and get yourself on a path toward financial freedom. It is in your best interest to work with a bankruptcy lawyer to complete the process because a lawyer can advise you about the choices you face and advocate for you during interactions with the court and your creditors.

Working with a lawyer is a professional partnership. In order to help you, your lawyer needs to know every detail of your case, even the ones that you feel are unsavory or embarrassing. If you are not willing to address your problems accurately, you are not ready to file for bankruptcy.