Chapter 13 filers must follow the process for incurring new debt after their petition date, which can include obtaining the consent of the trustee and the creditor.
If you’ve filed a Chapter 13 case, you can expect to make payments and be under the court’s protection for three to five years. Most debtors find it almost impossible to avoid new debt, known as "post-petition" debt, while paying into a Chapter 13 plan. Knowing how to handle this debt when it arises can impact whether your payment plan succeeds or fails.
What Are Pre-Petition and Post-Petition Debts in Chapter 13?
Debts you owe on the day you file your bankruptcy petition are called “pre-petition” debts, and the bankruptcy court has jurisdiction over them, meaning that qualifying debts can be discharged or paid less in your case. By contrast, the court lacks authority to modify post-petition debts incurred after the petition date, and the general rule is that you must obtain permission before incurring them.
Liability for Post-Petition Debts
For the most part, post-petition debts aren't part of your bankruptcy case, which means you won’t pay them through your plan and are not eligible for discharge at the end of your case. Although you are liable for debts you incur post-petition, bankruptcy’s automatic stay could delay the creditor’s ability to collect. The stay itself doesn’t end when your plan is confirmed. It continues until your case is closed, dismissed, or you receive a discharge. What changes at confirmation is who technically owns your property: confirmation of your plan generally vests the estate property back in you, the debtor. (11 U.S.C. § 362(c); 11 U.S.C. § 1327(b).)
Courts disagree about what that shift means for a post-petition creditor’s ability to reach your wages or other property. Because the stay’s protection against creditors taking “property of the estate” only applies while that property still belongs to the estate, some courts have found that once property vests in you at confirmation, it might no longer qualify for that particular protection. Other courts hold that your case remains an active estate under a separate provision until it’s fully closed, dismissed, or converted, keeping the stay’s reach intact. (11 U.S.C. § 1306(a).)
The result depends on where you file, so ask your attorney or trustee how your district handles this issue before assuming a post-petition creditor is fully blocked from collecting.
Process for Incurring Post-Petition Debt
You can incur post-petition debt and include it in your Chapter 13 case under special circumstances. The Bankruptcy Code doesn’t explicitly say you must get approval before incurring new debt, but most confirmed plans and local court rules require it anyway, and courts have found approval implicitly necessary since your post-petition income is the backbone of your plan’s funding. (11 U.S.C. § 1305.)
Trustee and Court Approval
During your Chapter 13 bankruptcy, you are supposed to get the trustee's approval before using credit or incurring debt. If the trustee approves, you generally don’t need to go any further. If the trustee denies your request, or if your debt exceeds a dollar threshold set by your court's local rules or your confirmed plan, you'll need to file a formal motion asking the judge to approve it. A creditor's claim for the new debt can even be disallowed later if the creditor knew or should have known that getting the trustee's approval was possible and you skipped that step. (11 U.S.C. § 1305(c).)
Local rules often set specific dollar limits for when formal court approval kicks in. For example, requiring notice to the trustee for smaller debts but a full motion for anything secured by real estate above a set amount. Some courts also allow a one-time emergency loan up to a modest amount without prior approval, as long as you file a notice explaining the circumstances shortly afterward. Refinancing or modifying an existing mortgage usually doesn't require this kind of advance approval at all.
However, courts recognize that it’s not always possible to obtain approval for incurring new debt. For example, you might not be able to get prior approval for unexpected tax bills or medical expenses. The bankruptcy court will take the circumstances of the new debt into consideration and might approve a request to include the debt in the Chapter 13 repayment plan, even if you didn’t get prior approval first. Courts generally look at whether the debt was necessary and reasonable, such as a car loan for a vehicle that lets you get to work or a bill for needed medical care, and whether the new payment will leave you with enough income to keep funding your existing plan.
For debts you can plan for, like car loans or appliance purchases, many courts and trustees have guidelines for debtors searching for the best deal. The guidelines take into account current market rates for value and interest rates. Guidelines usually allow for at least a modest vehicle likely to last through the remainder of the plan.
Including It in the Plan
Whether your post-petition debt is paid through your plan or outside it is ultimately the creditor’s choice, not yours. The creditor indicates its consent to the bankruptcy court by filing a proof of claim. The creditor must file the proof of claim. You can’t file the proof of claim for the creditor, and the creditor can’t be forced to participate in your case.
If the creditor files a claim and it's allowed, the debt is treated like your other claims for payment purposes and shares the same pool of plan funding as your existing creditors. Because that pool is limited, adding a new claim can shrink the percentage your prepetition unsecured creditors ultimately receive, which is one reason trustees and courts scrutinize new post-petition debt closely.
On the other hand, a creditor might not consent to payment through your bankruptcy case if you propose to pay only a small percentage of its total claim in your Chapter 13 plan and discharge the rest at the end of your plan period. This creditor might prefer to wait and commence collection on its debt once your bankruptcy case is over.
If the creditor never files a claim, you must pay the debt directly out of your own income, and because it's paid outside the plan, that debt is not wiped out when your case ends and remains fully collectible afterward. Paying it directly can also strain your budget enough to require a formal plan modification that reduces payments to your other creditors.
To obtain approval from the bankruptcy court to modify your plan payment, you must show that you have the funds to pay the debt. This could get tricky given that your creditors have the right to share any extra income you have during the plan. If the court grants your request to modify your payment plan, it will be amended to include the debt. The amended plan states whether the new debt will be paid through the plan or paid directly, and it modifies how your monthly payments are distributed.
Converting or Dismissing Your Case
Including post-petition debts in your Chapter 13 plan might not always be the best course of action. If you can't afford to pay the debt, even though your plan (for example, say it’s a very large medical debt), you might be better off converting your Chapter 13 case to a Chapter 7 case or dismissing the Chapter 13 case altogether.
If you convert your Chapter 13 case to a Chapter 7 bankruptcy, the “new” case will include any debts you incurred after your original bankruptcy filing and before the conversion date. These debts will be discharged in your newly converted case (assuming they would otherwise be dischargeable). You don’t have to get creditor consent or trustee approval to convert to Chapter 7. (11 U.S.C. § 348.)
If you dismiss your Chapter 13 case, you can probably refile the case soon after. You will include all the debts you listed in the original filing plus any that you incurred since the filing. Be careful, though. Depending on how many Chapter 13 cases you’ve filed, the automatic stay might not be automatic. You might have to justify to the court why you need it before the court will impose it. (11 U.S.C. § 362.)
Navigating Your Bankruptcy Case
Bankruptcy is essentially a complicated qualification process, and the resources below can help you navigate your case.
