The Frequency of Declaring Bankruptcy: An In-Depth Analysis
Declaring bankruptcy is often viewed as a last resort for individuals and businesses struggling with insurmountable debt. But a burning question arises: how often can you declare bankruptcy?
The Legal Perspective on Bankruptcy Declarations
From a legal standpoint, one could technically file for bankruptcy multiple times. However, this path becomes increasingly restrictive with each filing.
“Legally speaking, a person can file for bankruptcies as many times as they want. However, the process becomes more restrictive.”
The Implications of A Second Bankruptcy Filing
In the case of a second bankruptcy, automatic discharge, which usually occurs after nine months, is no longer an option. Instead, the bankruptcy can last anywhere from 24 to 36 months, depending on factors such as surplus income.
A trustee will need to request a court hearing for the discharge application. Consequently, the court decides the discharge terms, including the bankruptcy duration and any ongoing payments.
A creditor may oppose the bankruptcy discharge, possibly extending the bankruptcy duration and increasing the cost.
Consequences of Multiple Bankruptcies
Multiple bankruptcy filings come with severe consequences. Apart from the extended bankruptcy duration, the debtor’s credit rating takes a significant hit.
A first-time bankruptcy stays on the debtor’s record for 6-7 years. In comparison, a second bankruptcy can remain on the record for up to 14 years.
Credit Rating Impact
- First bankruptcy: 6-7 years.
- Second bankruptcy: Up to 14 years.
Making Informed Financial Decisions
Deciding to file for bankruptcy for a second time is a challenging choice. Therefore, consultation with a Licensed Insolvency Trustee (LIT) is crucial.
At organizations like Bankruptcy Canada, professionals provide expert advice on the merits and demerits of a second bankruptcy, along with potential alternatives.
Navigating the Bankruptcy Filing Process
If bankruptcy is the chosen path, LITs can guide you through the entire bankruptcy filing process from start to finish.
Conclusion
While the question of how often can you declare bankruptcy may have a simple legal answer, the reality is more complex. Multiple bankruptcies come with increased restrictions and long-lasting consequences. Therefore, it’s essential to seek professional advice and consider all options before making this significant financial decision.
“Remember, bankruptcy should be the last resort. Explore all other possibilities before taking this step.”
