- Chapter 7 bankruptcy requires a debtor to liquidate many of his assets -- assets such as real property and nonluxury vehicles aren't affected -- and the proceeds are split among creditors. Any remaining debt after sale of assets is forgiven. Chapter 7 bankruptcies remain on a debtor's record for 10 years after the filing date. Chapter 7 bankruptcies cannot be filed within eight years of a previous Chapter 7 filing or six years after a Chapter 13 filing, but otherwise debtors can file as many times as they wish.
- Instead of liquidating a debtor's assets, Chapter 13 grants a stay on collections while the court develops a payment plan to repay debtors. After a repayment plan is negotiated between the court and creditors, debtors pay monthly payment options to the court, not creditors, which then distributes funds to creditors. Debtors must wait at least two years after a Chapter 13 filing to file another one. Chapter 13 filings remain on a debtor's record for eight years.
- Some lenders might overlook a bankruptcy filing, particularly one several years in the past, and grant credit, albeit on less forgiving terms, to borrowers with a single bankruptcy in their past. Multiple bankruptcies can have a severely bad effect on your credit and make it nearly impossible to secure financing for a home or an automobile loan. If at all possible, multiple bankruptcies shouldn't be filed unless the original one was far enough in the past to be deleted from your credit history.
- Any debtor who has been forced into multiple bankruptcies should begin the process of rebuilding her credit immediately. Steps toward rebuilding credit after numerous bankruptcies include avoiding carrying any credit card balances, reaffirming your auto loan debt and developing new lines of credit. Although the final option is increasingly difficult after multiple bankruptcies, debtors should immediately begin demonstrating they can handle credit responsibly as soon as their bankruptcy is discharged.
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