Can Debt Accrued After Filing Bankruptcy Be Discharged?
The bankruptcy court has jurisdiction over your debts as of the day your bankruptcy petition is filed, called “pre-petition debts.” But what do you do if you incur debts after the bankruptcy petition is filed?
The general rule is that post-petition debts are not included in the bankruptcy case. For instance, if you file a bankruptcy case to get rid of credit card debt, but then have to go to the emergency room the day after filing, the post-petition medical debt is not included in the bankruptcy case. The debtor has 2 options to pay or discharge the medical debt.
First, a Chapter 7 debtor may have two options to discharge the debt: (1) dismiss the case and re-file a second Chapter 7 bankruptcy; or (2) convert the case to a Chapter 13 bankruptcy. Re-filing a bankruptcy case is never a pleasant option and the debtor would have to pay the $299 court filing fee again and the second bankruptcy further harms a personal credit file. A Chapter 7 debtor does not have an absolute right to dismiss his case prior to discharge and must “show cause” why the court should dismiss the case.
A second option for a Chapter 7 debtor who needs to discharge excessive post-petition debt is to convert the Chapter 7 case to a Chapter 13 repayment case – if they can qualify for a chapter 13 bankruptcy. All debts that arise after the Chapter 7 filing and before the Chapter 13 conversion are included in the Chapter 13 case. Only one bankruptcy case is counted on your credit file, and the post-petition debt may be included in your discharge at the end of the case.
Likewise, Chapter 13 debtors may elect to convert to Chapter 7, if they otherwise qualify. Chapter 13 debtors have an absolute right to dismiss their Chapter 13 bankruptcy case prior to discharge, unlike Chapter 7 debtors. In some cases a Chapter 13 debtor may ask the bankruptcy court to include a post-petition debt in the bankruptcy case. The debtor must file the appropriate motion to include the post-petition creditor in the Chapter 13 repayment plan and file an amended plan providing for full payment of this debt. If the creditor objects to it being included in the Chapter 13 repayment plan, the debt will not be added to the plan. However, the creditor is prohibited from collecting the debt until the case is concluded. If the creditor agrees and files a proof of claim, the creditor will then be allowed as part of the Chapter 13 plan.
Post-petition debts can cause a few stumbling blocks for any bankruptcy debtor. Discuss your options with your bankruptcy attorney as soon as you discover any post-petition debt. Acting timely is often a serious consideration and delay could limit your options for paying or discharging your post-petition debt through bankruptcy.
If you are considering filing for bankruptcy, contact the Law Offices of Chirnese L. Liverpool at (818) 714-2200.