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When is Filing for Bankruptcy Not a Good Idea?

When you are unable to handle your debt load, whether that debt load is personal or business debt, you might consider filing for bankruptcy. Bankruptcy is a legal process through which an individual or company in debt can have that debt discharged, either through the liquidation of assets (Chapter 7), a repayment plan (Chapter 13), or a reorganization of the company (Chapter 11). Other chapters exist as well, such as Chapter 9, Chapter 12, and Chapter 15, but these are for niche purposes and only utilized by specific groups.

Although bankruptcy is an option for regaining control of your debt, it might not be your only option. Even if it is one of many options available to you, it might not be your best option.

You Have Debts You Cannot Discharge

Filing for Bankruptcy a Second Time

When you are struggling with an uncontrollable level of personal debt, filing for bankruptcy is not an ideal outcome. However, it is sometimes the best outcome for your situation because it allows you to make the lifestyle changes you need to make to regain control over your finances and negotiate a fair settlement with your creditors. Whether you file for Chapter 7 or Chapter 13 bankruptcy, you will work closely with the court to ensure that your rights are protected and your debts are paid.

But new emergencies can strike and old habits die hard. It is not unheard of for an individual to find him or herself bankrupt for a second or subsequent time in his or her life. If you find yourself in this situation, know that there is a minimum time limit between discharges you can receive. In other words, if you filed for bankruptcy the first time fairly recently, you might be barred from receiving a discharge until a certain amount of time passes. Do not confuse this with a time limit on filing for bankruptcy again – you can do this at any time. But if you cannot receive a debt discharge, the second or subsequent bankruptcy could be useless.

The Chapter Determines the Time Limit


Filing for bankruptcy can be an overwhelming decision. However, according to the Wall Street Journal, it is one more than 1.6 million Americans made in 2010 alone.

It is important to remember — despite popular opinion — that filing for bankruptcy is not innately bad. Also, it does not mean the filer was financially irresponsible. Often, an unexpected event, such as a company shutdown or injury, can leave a person with insurmountable debt.

Whether you file for chapter 7 bankruptcy, which involves the liquidation of assets, or chapter 13 bankruptcy, which involves a payment plan that restructures debt, this decision may be a step toward financial stability. However, you should be ready for the challenges that come with bankruptcy; these may include living without a credit card and following a strict budget.


Many people assume that debt is inherently bad. The truth, however, is that debt and credit can be tools that allow individuals to live more comfortable, fruitful lives. Loans help people buy homes and attend college, and credit can help those who find themselves in temporary financial hardship. Unfortunately, poor financial management and unexpected circumstances can cause debt to spiral out of control. When this happens, bankruptcy might be a viable option.

Filing bankruptcy is a serious choice, but it is often a smart decision. If you are considering bankruptcy, you should discuss your case with an experienced attorney. A bankruptcy lawyer can help you avoid mistakes that could compromise your interests.

Is Bankruptcy the Right Option?


As per Foreclosure.com, the nation's largest provider of data of homes in financial distress, reports that 31,043 Illinois homes are currently in pre-foreclosure status as 23,486 household are already actively involved in the process. In addition, 34,975 bankruptcies have also been recorded during the first quarter of 2015.

With each number representative of an individual or family engrossed in various levels of financial distress, no doubt stress levels may be running high with the need for consulting with an experienced Illinois foreclosure or bankruptcy attorney on the rise.

If you are one of the 23,486 Illinois residents in pre-foreclosure status, the need for an experienced attorney is key as questions about rectifying your situation require qualified answers.

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