Bankruptcy laws, the name itself sounds like a big, bad scary thing. Well, these laws are not at all scary. In fact, if you have a closer look into the same, you will find that they have specifically designed to benefit the debtors. However, at the same time, they have also been designed to prevent debtors from committing fraud and misusing the laws. If you are considering filing bankruptcy, there are lots of things that you need to be aware of. The more informed you are, the better are your chances of having a favorable judgment from the court.
How Many Times One Can File For Bankruptcy?
It is not like you can file for bankruptcy again and again. There are certain restrictions that you need to follow. There must be a specific length of period between two filings of such cases by the same person or business. Earlier the restrictions were a bit easier, but after the introduction of the new laws in October 2005, things have become stricter for the debtors. As per the new laws, if you are filing for chapter 7 bankruptcy this year, you will be able to file under the same chapter only after eight years, that too, only if you are truly in a very deep debt trouble and qualify to file under this chapter. The length of the period required between two chapter 13 filings is two years. Likewise, if you have filed under chapter 7 now, you will have to wait for at least four years for a chapter 13 filing.
A Word Regarding Multiple Bankruptcies
However, it is very important for you to understand that multiple bankruptcies are very bad and you must avoid this from happening. It has been found that, sometimes people take bankruptcy laws as an easy solution to wipe out all the debts they owe to the various creditors, and they get into the habit of filing for bankruptcy repeatedly. It is not an exaggeration to say that they are sick people, and it is very much like committing a fraud. What is more, it is of no good for your financial life as well. Your credit report will get the worst negative you ever had. You may not achieve a smooth financial life ever again. You will have to take another birth to achieve the same, so you had better not do this.
Borrowing Lots Of Money Just Before Filing
Sometimes, people try to be over smart, and in order to take advantage of the loopholes of the bankruptcy laws, they try borrowing lots of money just before filing. Always remember that such activities come under fraud. What is more, the recent law changes have left no scope for such frauds. Therefore, if you are trying such things, be very alert. It can put you into a much deeper trouble, which is worse than having a debt problem.
Overall, it is always prudent to be fully aware of all the aspects of bankruptcy laws. It will help you to make right decisions.
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