You can add debts to your bankruptcy in some cases
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Bankruptcy, whether you choose Chapter 7 or Chapter 13, is a great way to dig yourself out of a financial mess. But it's pretty much a one shot deal. Think of it as a garage sale for your debt – you have that one day to unload your stuff – and you can't go back and retroactively add anything to that garage sale. That's a broad idea of how debt in a bankruptcy works. All the debt you had when the bankruptcy is filed can be part of the bankruptcy and you can't go back and add any, as a rule. However, there are some exceptions.
When can you add debt to a Chapter 7 bankruptcy?
When you come in for your bankruptcy consultation with your attorney, you should bring in copies of all your bills and, ideally, also a recent version of your credit report. That way, you can make sure that all of your debts make it into the bankruptcy filing. But you may not bring everything or you may have a recent bill that you don't have a copy of or that isn't reflected on your credit report.
If you realize after the initial filing that you forgot to include a debt, you can notify your attorney and the petition can be modified to include it. You may have to pay a modest fee for the additional paperwork. The main issue is that it must be a debt that was incurred prior to the date your attorney filed your petition. Any debt filed after that date may not be included in that Chapter 7.
When can you add debt to a Chapter 13 bankruptcy?
A Chapter 13 bankruptcy can also be modified if you forgot to include a bill or debt in the pile of paperwork you gave your attorney. This can be a little more of a hassle if the debt is sizable, particularly if it's secured because it could necessitate a change in your Chapter 13 repayment plan. If your attorney has to redraft your repayment plan, you'll likely have to pay an additional fee.
When can you add debt to a bankruptcy after the initial filing date?
There are a few instances where you can add debts to your bankruptcy petition that were incurred after your initial bankruptcy filing date. These include:
- If your Chapter 13 is dismissed and you file another Chapter 13, any new debt incurred between the two new petitions can be included.
- If you file a Chapter 7 and get a discharge then file a Chapter 13 (commonly called a Chapter 20), you can add any new debts to the Chapter 13 petition.
- If you file a Chapter 13 and cannot keep up with the payments and decide to convert to a Chapter 7, any debts incurred between the Chapter 13 filing date and conversion date can be added to the Chapter 7.
How to avoid having to modify your bankruptcy petition
The best way to avoid the time (and possible expense) of modifying your bankruptcy petition is to carefully consider the timing of your filing and take your time in the preparation phase. Because most people view bankruptcy as an option of last resort, they hold off and then rush into it at the last minute. But a better way to proceed may be to schedule a bankruptcy consultation – reputable bankruptcy attorneys will offer this session for free – to discuss your debt circumstances and your options before it reaches a crisis phase.
The attorney can advise you on timing so that you'll know if it's best to pull the trigger now or wait. For instance, if you have negative equity in your home, can't afford the mortgage payments and are delinquent, it may be best to wait until after the foreclosure to file so you can wipe out any related debt. On the flip side, if you are behind on your mortgage but have a lot of equity in the home, filing a bankruptcy to stop a foreclosure may be preferable. But you shouldn't try and figure this out on your own – talk to a lawyer.
Second, preparation is key. Gather two years of tax returns, a month's worth of your most recent pay stubs, bills (those that come in the mail and copies of any electronic bills), bank statements showing other bills you pay online and any other statements of assets such as savings accounts. You also need to verify expenses so pull together receipts for childcare, your rent or mortgage agreement, car loan and other financial agreements. In short, anything related to assets, liabilities, income and expenses should be brought along to the consultation.
To find out more about North Carolina bankruptcy relief, contact the Law Offices of John T. Orcutt for a free consultation. Call 1-888-234-4181 for an appointment in Raleigh, Greensboro, Fayetteville, Garner, Durham or Wilson.