If you file for Chapter 7 or Chapter 13 bankruptcy and the bankruptcy discharges (wipes out) a particular debt, that means you no longer have to pay it. But bankruptcy laws do not prohibit you from voluntarily paying debts after the discharge. There are reasons that you might consider repaying a debt, even though you are no longer responsible for it. (To learn more about the bankruptcy discharge, including which debts you can discharge in bankruptcy and which you cannot, see Which Debts Are Discharged in Chapter 7 Bankruptcy?)
Here are some circumstances in which you might consider repaying a debt that was discharged.
You Have a Cosigner on a Loan
Perhaps someone cosigned or guaranteed a loan or credit account for you, for example a car loan, store credit card, or a personal loan. Even though you no longer have to pay the debt, your cosigner is still liable for the debt (unless the cosigner also filed for bankruptcy). There's one exception: If your cosigner is your spouse and you live in a community property state, your spouse may be protected by your discharge. (Learn more about what happens to cosigned loans in bankruptcy.)
If you incurred the debt and the creditor is seeking payment from your cosigner, you might feel like you should pay it. Once your bankruptcy case is over, you are free to pay the cosigned debt.
You Borrowed Money From a Relative
If you borrowed money from a relative, the bankruptcy laws treat it as any other debt. Your relative cannot pressure you to repay the debt -- that would be a violation of bankruptcy laws. But if you feel obligated to pay up, you can do so.
The Creditor Is a Medical Provider
Medical debt is unsecured debt that is almost always discharged in a bankruptcy case. If your debt to a medical provider was discharged, the medical provider cannot violate the discharge by forcing you to pay the debt after the bankruptcy case. But the provider can refuse to provide further services to you.
Many people who file bankruptcy feel particularly regretful about discharging medical debt, especially to doctors or hospitals with whom they intend to continue a relationship. If this is your situation, you can voluntarily repay the debt.
You Have a Corporate Credit Card
If your employer provides you with a credit card to use for employment related expenses like travel or purchasing supplies, you may have to list the card in your bankruptcy and depending on the type of card, your liability to your employer for charges might be discharged.
Many employees feel obligated to repay their employers for unreimbursed charges, especially if those charges were for personal expenses, and not business expenses.
Creditors May Treat Your Payments on a Discharged Debt Differently
Keep in mind that most creditors expect to close accounts and charge off balances when they receive notice of your bankruptcy filing. If you want to continue paying on an account that you had before you filed, the creditor may treat your account differently than before you filed. For instance, some creditors will do the following:
- Not send monthly statements. This is because the creditor fears that a statement might be considered an unlawful attempt to demand payment on an account that was discharged in the bankruptcy.
- Restrict your payment options. Some creditors won't allow you to use online payment options or might make you pay through their collection departments.
- Refuse your payment. A creditor is especially likely to do this if its records show that the account is closed.
- Not report to the credit reporting agencies. Some creditors will not report your on-time payments to the credit reporting agencies if the debt was discharged in bankruptcy, unless you have signed a reaffirmation agreement. This means that making payments on those debts won't help to rehabilitate your credit score.