Can a Creditor Take Money After a Chapter 13?
- When a debtor receives a Chapter 13 bankruptcy discharge, the debtor does not have to keep paying certain debts. The creditors with discharged claims cannot demand payment from the debtor. The creditors cannot file lawsuits against the debtor since payment for those debts can no longer be enforced. Garnishing the debtor's wages or seizing the funds in the debtor's bank account is also prohibited. Performing those types of actions is a violation of the Bankruptcy Code. The debtor can file a motion with the bankruptcy court to reopen the case and request the court issue an injunction against the creditor based on 11 U.S.C. §524. The creditor may be sanctioned by the bankruptcy court for its actions.
- There are debts that are not dischargeable in the bankruptcy. If the debtor still owes money to the creditor with a nondischargeable debt after the Chapter 13 case closes, the creditor can continue taking money from the debtor. This may occur if the debtor is making child support or alimony payments. The debtor must continue to satisfy his financial obligations based on the terms of the agreement decreed by the family law court. Sometimes the financial obligations may extend beyond the duration of the Chapter 13 bankruptcy. When the debtor fails to continue making payments after the bankruptcy, the party responsible for collecting payment can pursue the appropriate legal action to receive compensation.
- A secured creditor has a lien on the debtor's real or personal property. Secured creditors can continue to request payment from the debtor if the loan is not paid off by the time the Chapter 13 case ends. If the debtor has a mortgage or car loan that he was paying throughout the bankruptcy case, the debtor needs to keep making those payments if he wants to keep the respective properties. The debtor is still personally responsible for abiding by the terms of those contracts. The secured creditors do not have a right to request payment from the debtor if he surrendered the property during the bankruptcy and the creditor's claim was discharged by the court.
- A Chapter 13 case may last up to five years. During the bankruptcy, the debtor may incur more debt, such as a personal loan or a mortgage, if he receives permission from the bankruptcy court. If the debt was acquired after the bankruptcy case was filed, the debtor remains personally liable for paying that debt. The debt will not be included in the bankruptcy discharge. Those creditors can take money from the debtor without worrying about violating the Bankruptcy Code because they were not part of the bankruptcy case. The debtor has to wait at least two years before he can file another Chapter 13 case and possibly receive a discharge of the new debts.
