Nobody wants to file for bankruptcy, but it happens – and some people have it happen more than once. As long as you wait the appropriate time limit between bankruptcies (which varies according to what type of bankruptcy you filed before and what type you want to file now), there’s no actual limit to the number of times you can receive a discharge of your debts. Many people (even former Presidents) have filed multiple bankruptcies over their lifetimes.
Why do people end up filing more than once? It’s not financial irresponsibility that puts most people in that position. Instead, it usually comes down to challenges including the following.
Economic downturns and job losses
The economy can be unpredictable, companies fold and whole industries can experience massive losses due to changing consumer needs or changing technology. Entire sections of the country can end up being economically depressed for years, and people who lose their jobs due to such upsets can find it very difficult to regain their financial stability. In places where there’s one main employer or industry, the normal “ups and downs” of business can be financially devastating for the workers.
Illness and outrageous medical expenses
There’s no question that the U.S. health care system has problems, not the least of which is the tremendous expense of treatment. Even with insurance, co-pays and deductibles can quickly lead to enormous financial strain. If someone has an accident or a brief illness, that can be enough to force them into bankruptcy. If the health issue resolves and never repeats, one bankruptcy may be enough. When a family has a member who is in chronic ill health, however, multiple bankruptcies over the years may be the only effective way to deal with the medical debts that gradually pile up.
Failed business ventures or entrepreneurial challenges
In business, you have to take some risks for real financial rewards – but the same factors that can leave workers scrambling for financial security can affect business owners, as well – even when they’re well-established. Entrepreneurs may have it even rougher. Breaking into a market (or creating one) can be harder than most people realize. About 20% of new businesses fold during their first two years, and 45% fail within five. Many of those business owners need bankruptcy relief so that they can move on and maybe try again.
If you’ve filed for bankruptcy in the past, there’s no reason to be ashamed of new financial difficulties. Your bankruptcy won’t be denied just because you’ve been there before, as long as you observe any relevant waiting periods. Seeking legal guidance may be able to provide the insight and reassurance you need to move forward.