Filing Bankruptcy More Than Once
The goal of bankruptcy is to get you back on your feet financially. However, if your spending habits don't change or you don't take steps to raise your income, subsequent bankruptcies may become necessary. Filing bankruptcy more than once is not a good idea in most cases, so use multiple filings only as a last resort.
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Filing Frequency
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Technically, you can file bankruptcy as many times as you like. The catch is that there are regulations on how often you can get a discharge. You want to get a discharge because the discharge absolves you of responsibility for the debts you owe. If you can't get a discharge, there isn't much point to the bankruptcy filing. Stipulations on bankruptcy discharges mean that you have to wait eight years between each Chapter 7 filing, two years between each Chapter 13 filing and four to six years between a Chapter 7 and Chapter 13 filing (depending on the percentage paid in the discharge), says the Bankruptcy Law Network.
Impact on Credit Score
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Financial experts recognize bankruptcy as one of the worst debt solution methods in terms of your credit score. Because so many factors influence individual scores, it's impossible to predict an exact point figure by which your score will drop if you file bankruptcy once, let alone more than once. However, Les Christie of CNN Money, citing a FICO study, reports that your credit score probably will drop between 130 and 240 points with a bankruptcy filing. With such dramatic drops in your score possible, multiple filings can quickly destroy your credit.
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Getting New Financing
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New lenders and creditors often hesitate to provide credit to those who have filed bankruptcy. The lowered credit score alone signals you are a greater financial risk, with the fact you couldn't use alternate debt management plans to avoid bankruptcy appearing like the nail in your financial coffin. Some creditors are willing to work with you at higher interest rates despite a bankruptcy because they know you can't discharge new debt immediately, and because they understand bad things happen beyond your control that drain finances. However, you have to show the creditor or lender you have rehabilitated yourself financially -- that is, that you are paying debts on time and have a better debt-to-income ratio than in the past. Multiple filings tells a creditor or lender that you haven't gotten your spending and debts under control despite the credit counseling bankruptcy requires. Most creditors and lenders simply aren't willing to give you multiple chances to redeem yourself. If you file more than once, you must be prepared to get by without new credit lines since bankruptcy stays on your credit report for up to 10 years.
Abuse of the System
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Even though you technically can file for bankruptcy as often as you like, bankruptcy courts will be more suspicious of your financial habits and situation if you file more than once. Multiple filings within a short period triggers the courts to review your filing more closely and to look for evidence that you're simply abusing the system fraudulently. In other words, the more times you file bankruptcy, the more time your case may take and the more difficult it will be to get through the bankruptcy process.
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References
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