Adding New Debt During a Chapter 13 Bankruptcy

Wipe our Debt

Wipe our Debt (Photo credit: Images_of_Money)

Question Concerning New Debt

Life goes on whether or not you have filed for bankruptcy protection. Filing a Chapter 13, called a wage earner’s plan, requires you to make a 3 or 5 year plan to pay back part or all of unsecured debts with your disposable monthly income. You never know when something like a medical problem will occur. They can often be very expensive and be large debts, so can you add these types of unexpected expenses to your Chapter 13?

Answer to the Question About Adding New Debt

Unfortunately, you cannot add new debt to a Chapter 13 case from the date that you filed. You can add debt that was made prior to your filing, called old debt.

When you have old debt that you may have forgotten about, and you want to add the creditor to the Chapter 13 plan, you must petition the bankruptcy court to amend the plan to include the old debt. This takes the time of your lawyer to fill out the new paper work and time from the courts. Both adds additional cost to your bankruptcy. So, you need to list all your creditors and debts at the time you petition the court to file.

A Possible Solution to the Problem of Adding New Debt

No one can predict when medical emergencies may arise. Not being able to add new debt is one of the unfortunate characteristics about a Chapter 13, especially when you have new medical expenses after after you have filed.

One of the remedies for unexpected debt, if you qualify, is to convert your Chapter 13 into a Chapter 7 bankruptcy. In a Chapter 7, you are allowed to add new debts up until the bankruptcy closes.

In either a Chapter 7 or a Chapter 13, there is a discharge of debt. Once the discharge comes, the creditor cannot attempt to collect from you ever again on the debts discharged. In a Chapter 13, any unsecured debt left unpaid in the plan will be discharged at the end of the agreed payment period.

Debts That May Have No Solutions

Not all debts can be discharged in bankruptcy. Here are some debts that cannot be discharged in a bankruptcy unless you can prove certain undue financial hardship in the payment of such:

  1. Certain Taxes

  2. Child and Spousal Support

  3. Federal and Private Student Loans

  4. Home Owner Association Fees incurred after closing

  5. Debts you fail to list before the close of the bankruptcy

Bankruptcy laws can often be complicated. Deciding which creditors and debts to include in your bankruptcy petition is very important. Technically, you need to list all of your debts and creditors at the time you file because it will help you save money in the long run.

An experienced bankruptcy lawyer can help you devise a plan in a Chapter 13 bankruptcy that will meet your particular situation. Unexpected expenses can change the bankruptcy process, and even your attorney cannot help you prevent those.

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