What Can Be Done When Unexpected Expenses Happen While in Bankruptcy?

By Beverly Bird

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.

Get a free, confidential bankruptcy evaluation. Learn More

Voluntary Debts

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.

Hardship Discharges

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.

Get a free, confidential bankruptcy evaluation. Learn More
How Many Times Can You File Chapter 13?


Related articles

Difference Between Bankruptcy Closing & Dismissal

When your bankruptcy case comes to an end, it is said to have closed, but how it closes could have a significant impact on your liability for your debts. For example, if the court discharges your bankruptcy, you are no longer liable for your debts. If your bankruptcy is dismissed, however, you are still on the hook for payment. Even worse, the automatic stay that prevents creditors from coming after you during the bankruptcy process can be shortened or eliminated altogether if you file for bankruptcy again in the future.

Defaulting on Chapter 13

Chapter 13 is called a wage earner's bankruptcy for a reason -- you need enough disposable income each month after paying your living expenses to fund a repayment plan through the bankruptcy trustee. You must give him your extra money each month for three to five years, and he apportions it among your creditors. In exchange, your property is not subject to liquidation. If you fail to make your payments to the trustee, however, you could find yourself right back in the situation you were in before you filed for bankruptcy protection.

Will I Receive Notice to Vacate After a Bankruptcy Is Discharged?

Your landlord may not automatically evict you from your apartment just because you sought bankruptcy protection from your creditors. Your ability to keep your apartment depends on the type of bankruptcy that you file, the status of your rent payments to your landlord, and whether you keep your lease. Bankruptcy, however, does not prevent your landlord from removing you from the rental unit if eviction procedures were initiated before you filed your bankruptcy petition.


Related articles

Can You File a Chapter 7 After Filing a Chapter 13 & Suspending Your Payments?

One of the drawbacks of a Chapter 13 bankruptcy proceeding is that it takes a long time – a minimum of three years, and ...

Do I Have to Pay Back Medical Bills That Show Up After a Bankruptcy Discharge?

What you still have to pay after your bankruptcy discharge depends on what type of bankruptcy case you filed and when ...

How to Reduce the Payments to the Court Trustee in a Bankruptcy

When you file for Chapter 13 bankruptcy, you commit to a plan for repayment of your creditors that is overseen by a ...

Filing for Bankruptcy Vs. Paying Old Collections and Charge-Offs

If you're struggling to dig out from under a mountain of debt, you've probably considered your various options many ...

Browse by category
Ready to Begin? GET STARTED