When you file for Chapter 7 bankruptcy, you begin the process of obtaining a fresh financial start. That means you do not have to pay debts that are dischargeable in your bankruptcy, and should stop paying those debts once you have filed. However, there are some bills that you must or should continue to pay, depending on your situation. This article explains what debts you should or must pay during your Chapter 7 bankruptcy.
(To learn more about how Chapter 7 bankruptcy works, visit our Chapter 7 bankruptcy topic area.)
A Chapter 7 bankruptcy discharges eligible debts that you owed at the time that you filed your bankruptcy petition. Any debts that you incur after you filed—called post-petition debts—are not included in your bankruptcy and remain your responsibility, with some exceptions. Because these debts will not be discharged, you should continue to pay them.
Some common post-petition debts that you should continue to pay include:
- current utilities
- current rent and lease payments
- current condo or homeowners association (HOA) fees
- most taxes, and
(Learn more in Post-Petition Debts in Chapter 7 Bankruptcy.)
Certain Secured Debts
If you owe a debt that is secured by property, then you should continue making regular payments if you wish to keep the property. If you stop making payments, the lender can file a motion to lift the automatic stay and enforce its rights against that property, such as seeking foreclosure or repossession.
Common secured debts that you should continue to pay (assuming you want to keep theproperty) include:
- home equity line of credit, and
- car loan.
(Learn more about your options for dealing with secured debts in Chapter 7 bankruptcy.)
Child and Spousal Support
If you owe child or spousal support, you must continue to pay those obligations. Back child and spousal support claims will not be wiped out by your bankruptcy, nor are they subject to the automatic stay, so you must continue to pay it from your regular income.
(Learn about bankruptcy’s automatic stay.)
Other Nondischargeable Debts and the Automatic Stay
During the time you are in bankruptcy, you have a brief respite from some nondischargeable debts that you may owe. This is because the automatic stay protection may extend to debts that you cannot discharge in bankruptcy. Keep in mind, however, that once your bankruptcy case is closed and the automatic stay is terminated, you will remain legally obligated to pay those nondischargeable debts. Those debts include:
- student loans
- most taxes
- government or court fines and penalties
- reaffirmed debts (to learn what these are, see Reaffirming Debts in Chapter 7 Bankruptcy), and
- unscheduled debts.
(Learn which debts cannot be discharged in Chapter 7 bankruptcy.)
Voluntary Payments on Debts
You may decide to keep certain debts even though they would be discharged in your bankruptcy. Those include loans from friends and relatives, or medical bills from doctors or dentists that you wish to continue seeing after you file bankruptcy. You can make voluntary payments to these creditors, but you are not legally obligated to do so.
If you choose to make voluntary payments to a creditor on a discharged debt, you must use post-petition income or other non-bankruptcy assets to do so. If you use assets that are part of the bankruptcy estate to make these payments (such as non-exempt funds from a bank account or pre-petition tax refund), you will likely run into trouble.
The best way to handle these is to wait until after your bankruptcy is closed before making the voluntary debt repayments.