Understanding Pre-Petition and Post-Petition Debt in Bankruptcy
What Does Pre-Petition vs. Post-Petition Mean in Bankruptcy?
When filing for bankruptcy, it’s important to understand the difference between pre-petition and post-petition debt. These terms define when your debt was created and determine whether it can be included in your bankruptcy case.
Pre-Petition Debt
Pre-petition debt includes everything you owe before filing your bankruptcy petition. This is the debt you list in your bankruptcy paperwork, and it’s the debt you’re seeking to discharge. Examples of pre-petition debt include:
- Credit card balances
- Medical bills
- Payday loans
- Personal loans
- Foreclosure or repossession deficiencies
In most cases, pre-petition debt is discharged in bankruptcy, meaning you no longer have to pay it. However, some debts, like child support, taxes, and most student loans, cannot be discharged.
Post-Petition Debt
Post-petition debt is any debt you incur after filing your bankruptcy case. This debt is not included in your bankruptcy and cannot be discharged. You are responsible for paying these debts.
For example, if you file for bankruptcy and then take out a new loan, that loan becomes post-petition debt. In a Chapter 13 bankruptcy, you are not allowed to take on new debt without court approval. Doing so could put your case at risk of being dismissed.
Why Is This Important?
The goal of bankruptcy is to give you a fresh financial start. However, if you continue to take on new debt after filing, you may find yourself in financial trouble again.
To help you prepare for financial stability, bankruptcy law requires two courses:
- Credit Counseling Course: Taken before filing, this course helps you review your budget and decide if bankruptcy is the right option for you.
- Debtor Education Course: Taken after filing, this course teaches you how to manage your finances and avoid future debt problems.
How to Manage Debt After Bankruptcy
Once your bankruptcy is complete, it’s up to you to manage your finances carefully. Here are a few tips:
- Keep track of which debts were discharged and which are still due.
- Avoid taking on unnecessary debt.
- Build an emergency savings fund to cover unexpected expenses.
If you’re unsure whether bankruptcy is the right choice for you or if it’s time to file again, Walden Legal Solutions can guide you through the decision.
Understanding the difference between pre-petition and post-petition debt is key to making the most of your bankruptcy case. If you’re ready to file or have questions about the process, contact Walden Legal Solutions online today.
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