How to Avoid Filing a Second Wilmington Bankruptcy

How to avoid another bankruptcy

Image Nathan Dumlao vis Unsplash

Although many businesses love repeat customers, bankruptcy lawyers don’t usually want clients to have to come back to them. Ideally, after you get a bankruptcy discharge, you leverage that fresh start and enjoy a solid financial future.

Knowing why you needed bankruptcy is crucial

For most Wilmington bankruptcy filers, an unforeseeable major life event triggered their financial dilemma. You might have prolonged bankruptcy or an accident or illness that kept you out of work for a time. For others it’s divorce or a family crisis that caused the money woes.

If you know what pushed you towards bankruptcy and can get that situation cleaned up, you’re better equipped for the future. Bad things can happen to anyone, but if you’ve been through a financial crisis, you can prepare and try to prevent another from occurring.

Why you might want (or need) a second bankruptcy

In some cases, two bankruptcies might be a strategy recommended by your attorney. For instance, your Wilmington bankruptcy lawyer might recommend you file Chapter 7 followed by a Chapter 13. Chapter 7 can wipe out unsecured debt like medical bills and credit cards.

However, Chapter 7 won’t help with past-due balances on secured debt like a mortgage or car loan. Your lawyer might advise you to file Chapter 7, wipe out as much dischargeble debt as possible then use the Chapter 13 repayment plan to get other debt under control.

Refiling Wilmington bankruptcy after a dismissed case

You might also need to file a second bankruptcy if a case you filed in the past failed. For instance, perhaps you filed Chapter 13 but then were unable to keep up with the plan payments. If you fall behind, the Trustee may recommend a dismissal.

From there, you might want to file Chapter 7 instead (if you’re eligible) to shed your debt. Alternately, you might want to sort out your finances and file a subsequent Chapter 13 case to try again to stick to the repayment plan.

How to avoid an unnecessary second bankruptcy

Except for a problem with an original filing or a strategic second bankruptcy, you should try and avoid a second Wilmington bankruptcy. Here are some of the ways to best take advantage of your bankruptcy discharge and make sure you don’t need to file another one later.

#1 Build better habits – Always pay your bills on time. This is the habit that will keep you from sliding into a bad financial situation. It’s particularly important to pay bills on time that report to the credit bureaus. Set a budget, stick to it, and live below your means.

#2 Reestablish your credit – Your credit score may be at its lowest right before and after you file bankruptcy. Late and missed payments plus maxed credit lines wreck your credit. After your bankruptcy, work hard to rebuild your score, because with a better score, you can save on expenses like insurance, loans, etc.

#3 Set up an emergency fund – If you don’t have a financial safety net, even a small financial hiccup can cause problems. Start setting aside money each paycheck until you have an emergency fund of several thousand dollars. This can help you avoid trouble.

#4 Save for retirement – Every year, more seniors turn to bankruptcy for help with increasing expenses on their limited income. This is more common with seniors that have inadequate retirement savings. Social Security is not enough to cover expenses. Get busy with your 401(k) or an IRA.

Bankruptcy can change your life for the better. If you’re struggling financially, a well-timed Wilmington bankruptcy could be the best thing for your future. Done right, you shouldn’t need a second bankruptcy except in special circumstances.

To find out more about what bankruptcy can do for you, read reviews from our clients. After that, call +1-833-627-0115 to contact the Law Offices of John T. Orcutt to schedule a free Wilmington bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro or Wilmington.