Tips on How to Avoid a Repeat Chapter 7 Bankruptcy

Tips on How to Avoid a Repeat Chapter 7 Bankruptcy

Going through a business bankruptcy is not an easy reality to face. However, once an individual has gone through the process of filing a Chapter 7 bankruptcy and following through, they may not change their financial ways and end up right back in the same situation. Did you know that 16 percent of bankruptcy filings are not the person’s first filing? Because of this, it is important for a business owner to understand some different ways to avoid bankruptcy from happening more than once.

When it comes to Chapter 7 bankruptcy, there is no time limit on filing bankruptcy but there is a time limit on how often you can have a bankruptcy discharged. If you have previously filed a Chapter 7 and are looking to do so again, you have eight years to wait. This is why you want to ensure that you are making the best decisions and avoid a second bankruptcy at any cost, if possible.

Ways to Prevent Business Bankruptcy for a Second Time

Paying Off Credit Debt: After receiving the first discharge, many people will become bombarded by credit card offers and it can be extremely tempting to sign up. If you plan to rebuild credit, you need to show that you are going to repay your debt, not accrue more. Many Americans owe thousands in credit card debt. Pay off your cards monthly so that you don’t have to worry about outstanding amounts of debt.

Keeping Emergency Funds: Many people are not prepared for the unexpected, which is why a lot of individuals get into debt in the first place. This is especially true for those who experience sudden medical bills or become suddenly unemployed. Many people in America cannot even afford a $400 emergency, which is why you may find it especially important to build an emergency fund. This can keep you afloat if the worst situation occurs.

Tips on How to Avoid a Repeat Chapter 7 BankruptcyNever Ignoring Creditors: If you find yourself in an adverse financial situation, you should know that the creditors won’t stop calling just because you don’t answer the phone or try to avoid the situation. You should always get in touch with creditors and explain your financial situation. Sometimes, they will be willing to work with you to lessen the financial load on your shoulders. 

Creating and Following Budget: You must understand where your bills go when it pertains to your business. Perhaps a lack of budget led to financial distress in the past when you endured your first bankruptcy. Remembering how much you owe and on what every month can help you gain structure and get back on your feet. Even speaking with a professional financial planner can help in ways you might not have imagined.

Being Purposeful: Track your expenses at all times, because this is what business owners must do for the utmost success. From there, you will find that expenses are really necessary and be able to explore all of your options.

How a Bankruptcy Attorney Can Help 

Businesses are unpredictable, which means that you must be able to prepare for anything. When a business is not doing as well as anticipated, businesses may consider filing for Chapter 7 or another type of bankruptcy. At MJ Watson & Associates, our experienced and knowledgeable attorneys are well-versed in the bankruptcy process in Texas. We will assist you through every step of the process with the end result you have been hoping for. Please contact us at (214) 965-8240 for more information.

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