What Happens to Debts Incurred After Filing for Chapter 7 Bankruptcy?

Debts you incur after you file for Chapter 7 bankruptcy (post-petition debts) are not discharged.

by:  , Attorney

Filing for Chapter 7 bankruptcy can give you a fresh start from your financial troubles by wiping out most of your debts. But your discharge only eliminates debts that exist at the time you file your case (called pre-petition debts). This means that you will be responsible for paying back any new obligations you incur after filing your bankruptcy (called post-petition debts). Read on to learn more about what happens to debts incurred after filing for Chapter 7 bankruptcy.

Debts Incurred After Your Filing Date Will Not Be Discharged

If you take out a new debt after filing your Chapter 7 bankruptcy, it will not be part of your discharge. Only debts incurred prior to your filing date can be eliminated in your bankruptcy. This means that you will be on the hook and liable for any post-petition debts you incur after your case is filed.

What Is Considered a Post-Petition Debt?

The effective date for determining whether a debt is post-petition is your bankruptcy filing date. If a debt existed before your case was filed, it is a pre-petition debt that can be eliminated as long as it is a type of obligation that can be discharged in bankruptcy. (Learn what types of  debts are discharged in Chapter 7 bankruptcy.)

This means that you are responsible for paying back any charges you incur on your credit cards or any other debts you take out after you file your case. But if you simply have ongoing monthly payments on a debt that was originally incurred prior to your bankruptcy (such as a mortgage or car loan), the entire obligation is considered a pre-petition debt and will be discharged.

But keep in mind that for secured debts such as your mortgage or car loan, your discharge only wipes out your personal liability -- not your lender’s lien on the property. As a result, if you fail to make your monthly payments after bankruptcy, your lender can repossess or foreclose on your property.

To learn more, see Secured, Unsecured, and Priority Debt in Bankruptcy.

Rules for Homeowners and Condominium Association Fees

Your Chapter 7 discharge eliminates your personal liability for any unpaid homeowners or condominium association fees or dues existing at the time you file your case. But you are liable for any fees that come due after your filing date even if you surrender the property in the bankruptcy. In general, you remain liable for any homeowner or condominium association fees until the property is sold or foreclosed on so that it is no longer in your name.

Reaffirming Pre-Petition Debts

If you reaffirm a pre-petition debt during your Chapter 7 bankruptcy, you essentially sign a new contract with your lender that makes you personally liable on the obligation despite your discharge. The most commonly reaffirmed pre-petition debt is a car loan.

If you wish to keep your car after bankruptcy, your lender may ask you to reaffirm your loan. Because you are waiving the benefit of your discharge by reaffirming your debt, it is not a decision you should take lightly. Whether you will be required to reaffirm your loan to keep your car depends on your lender and the rules in your jurisdiction.

To learn more, see  Reaffirming Secured Debt in Chapter 7 Bankruptcy.

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