YOUR POST-DISCHARGE DEBT

Most Chapter 7 and Chapter 13 bankruptcy cases end with a discharge order from a federal bankruptcy judge.  The discharge is a permanent injunction that prohibits pre-bankruptcy creditors from collecting against the debtor, and represents a "fresh start" for the debtor.  It effectively eliminates most debts and allows the debtor to start over with his or her finances.

Taking care of your finances after receiving your bankruptcy discharge is extremely important.  The bankruptcy law requires that you complete a financial management course prior to your discharge which teaches basic management techniques.  While this course is helpful, the first step in managing your finances post-bankruptcy is to identify any post-discharge debts that were not eliminated as part of the bankruptcy.

First, what personal debt survived your bankruptcy case?  Post-discharge personal debt generally falls into one of three categories: (1) debt automatically excepted from discharge; (2) debt excepted from discharge by court order; and (3) post-petition debts.  Debts automatically excepted from discharge include student loans, most taxes, and child support obligations.  Debts excepted from discharge by court order include debts involving fraud or other bad conduct.  Post-petition debts are debts that first arise/became due after the day you filed your bankruptcy case.  Post-petition debts are not included in your bankruptcy case and are not discharged.

Second, do you have property debt that survived the bankruptcy?  In certain cases the personal obligation to pay a debt may be discharged, but the property lien survives.  Although you now owe nothing to the creditor, items secured by a property lien may be repossessed.  Consult with your attorney and determine what property, if any, may be at risk of repossession after your bankruptcy.

Finally, did you agree to any new financial obligation during your bankruptcy case?  Be clear about any new or changed financial obligation that you agreed to during your bankruptcy case.  If you executed a reaffirmation agreement, redemption loan, or modification, make sure you understand the terms and obligations contained in that agreement.

You and your attorney should discuss the impact of your Chapter 7 or Chapter 13 bankruptcy discharge on your debts.  Be certain that you understand which obligations are discharged and which survive the bankruptcy case.  Your bankruptcy attorney is happy to discuss your options for managing any debt that survives the bankruptcy discharge.