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Filed bankruptcy before? Here’s what to know a second time

On Behalf of | Apr 25, 2022 | Firm News

As a small business owner, you didn’t intend to go into bankruptcy the first time let alone twice. The economy took a turn for the worse, though, and you are now in a position where you’re not sure that you can keep your doors open.

You may be aware that there are limitations to how often you can file, but with at least three kinds of bankruptcy that you may be able to use, you could find that you can still use one to help you resolve your problems.

How long do you have to wait between bankruptcies?

The law is relatively straightforward, but the length of time you have to wait will vary based on the kind of bankruptcy you used in the past and the kind you intend to use now.

  • If you’ve had a Chapter 7 bankruptcy in the past eight years, you cannot file until at least eight years have passed. Keep in mind that your personal bankruptcy could be separate from a business bankruptcy if your business is not in your personal name, so you may still qualify.
  • Chapter 13 bankruptcies can happen more often than Chapter 7, requiring only two years between cases.
  • If you had a Chapter 7 bankruptcy within the last four years, you’ll need to wait at least four years before filing for a Chapter 13 bankruptcy.
  • If you previously used a Chapter 13 bankruptcy, six years will have to pass before filing for a Chapter 7 bankruptcy

So, depending on your circumstances, you could be able to file for bankruptcy as soon as two years following your previous bankruptcy.

Are there options to keep you out of bankruptcy?

There may be. Debt settlement could be one option open to you. Another may be a consolidation loan or working out a business loan through the Small Business Administration to help get through a rough patch.

How you can handle debt will come down to the specifics of your situation, if you’re expecting to see an uptick in business soon and how willing you are to keep your doors open or close them for good.