Filing for bankruptcy doesn't stop time in its tracks. Your life goes on, and events you had no way of anticipating can interfere with your plan for the future. If you've already filed for bankruptcy protection, it can be difficult – and sometimes even impossible – to go back and adjust your petition to deal with new, unforeseen expenses. Your options depend a great deal on whether you filed for Chapter 7 protection or a Chapter 13 reorganization plan.
In a Chapter 7 bankruptcy, the trustee liquidates your assets to pay your creditors as much as possible. Any remaining balances are erased or discharged. If you filed for Chapter 7, it's usually not possible to add new debts to your petition. Typically, you're stuck with paying unexpected post-petition expenses; the court won't discharge them along with your other debts. If the expenses occur early enough in the proceedings, however, you may be able to dismiss your bankruptcy and refile later to include them. If you haven't yet filed your credit counseling certificate – a requirement to qualify for Chapter 7 – the court will dismiss your case if you don't do so; you can then refile later. Otherwise, the law typically doesn't allow Chapter 7 debtors to dismiss their own cases. Some exceptions exist, however. The court may allow you to do so if you can prove good cause and that it won't put your creditors at a legal disadvantage.
Converting Your Plan
If you filed a Chapter 13 reorganization plan, you're repaying your debts through your disposable income each month. In this case, you have more options if new expenses surprise you after you file. If unexpected expenses prevent you from making your payments to the trustee as promised, you can petition the court to modify the terms of your plan, such as by extending it a little longer to lower your trustee payments. Another alternative is to convert your Chapter 13 into a Chapter 7. Converting to Chapter 7 would allow you to include your new debts or expenses with your old ones, so you can discharge them as well.
If you filed for Chapter 13 protection, the bankruptcy code doesn't permit you to take on new consumer debt during the life of your repayment plan -- at least not without the written consent of your bankruptcy trustee. Taking on new loans can impair your ability to make your payments to the trustee to pay off your existing creditors. In an emergency, however, your trustee might approve such a request if it doesn't affect your ability to make your payments. Your trustee might approve a new loan so you can meet unforeseen expenses -- as long as they were something you couldn't avoid, such as unplanned medical expenses, and not something you voluntarily committed to.
Depending on the seriousness of your situation, you might have a fourth option if you filed for Chapter 13 protection. In some cases, you can end your Chapter 13 reorganization plan early through a hardship discharge. You would not have to continue paying your creditors through your disposable income, and the court would discharge or erase the balances anyway. However, the court will only approve an early hardship discharge because you no longer have income or any ability to pay due to some circumstance beyond your control. Typically, you can't receive a hardship discharge just because new and unforeseen expenses have cropped up. Additionally, you must have made enough payments that your creditors received as much money as they would have if you had filed for Chapter 7 instead.
- Friedman Iverson: What if I Incur New Debt After My Bankruptcy?
- Law Office of Jeff Whitehead: Can a Chapter 7 Debtor Voluntarily Dismiss Her Own Case?
- High Desert Bankruptcy Center: What if I Can't Continue Making My Chapter 13 Plan Payments?
- The Galler Law Firm: What You Should Know About Your Chapter 13 (PDF)