If you get into financial trouble, there are many options open to you and there are lots of bankruptcy laws available to give you the help you need. But what happens when you get into financial trouble for a second time? What happens if you need a second bankruptcy?
A woman that I spoke with last week was asking this very same question. She had just gone through a divorce and was having trouble making payments on her overwhelming debt. Because she was used to a two-income household, being pared down to one was hitting her hard. Circumstances four years ago had forced her and her husband to file for bankruptcy, and it looked like she would have to file for a second time.
Fortunately, if you find yourself in trouble for a second time, like the woman above, you can file for bankruptcy again. The first thing you have to make sure of, though, is that your first bankruptcy is over. Have you had your debts discharged? Is your first bankruptcy file closed? If it isn’t closed and remains open, you are not eligible for a second bankruptcy until your first bankruptcy is completed.
You also need to understand that there are big differences between a first and second bankruptcy.
The biggest one is that in a first bankruptcy you are eligible for what is called an automatic discharge, where after 9 months your debts are automatically forgiven and you are no longer bankrupt. In a second bankruptcy, though, you are not eligible for an automatic discharge, but instead you need to appear in court in order for a judge to decide when you will be done being bankrupt and your debts can be forgiven.
There are many factors that the court takes into consideration when deciding how long you should be bankrupt for. Things like how long it has been since your last bankruptcy, what the nature of your first bankruptcy was, and what caused the second bankruptcy will all be taken into account.
Another big difference is the amount of time that the bankruptcy will be on your credit record. Instead of the traditional 6 years from the date of discharge, as quoted by Equifax Canada, your second bankruptcy will remain on your credit report for 14 years from the date of discharge.
If you find yourself in financial trouble for a second time, you might want to consider filing a consumer proposal, which isn’t as hard on your credit report and won’t leave a mark that is as long-lasting as a second bankruptcy.
Whatever the situation, though, you should talk to a licensed trustee as soon as possible so that you can take control of your situation. You can contact me for a free consultation by calling 310-PLAN, or you can email me any questions you might have about bankruptcy and other options available to you. Together we can make a tailor-made solution for whatever situation you are in. Let’s get started today.
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