While the idea of a Chapter 13 Bankruptcy is for debtors to devote all of their available income to paying off what they owe, and not to incur any new debts, this is not always how it works. An unexpected health problem may lead to new medical debts, or the person’s car might completely give out, and she might need a new vehicle to continue going to work. Even if there is no such clearly justifiable reason for incurring the new liability, it can take strong self discipline to convert from living beyond your means, to pulling in your belt enough to eliminate past excesses. Thus sometimes even the best intentioned debtor can slip up and accept a newly offered credit card that arrives in his mail box one fine spring day.
One option a debtor in a Chapter 13 has in this situation is to amend his bankruptcy plan to include the post petition debt. This is not an automatic right though. For most new debts the individual has to persuade both the court and the new creditor to go along with the idea. The court of course has to approve any amendments to a Chapter 13 bankruptcy plan, and the creditor has to agree to file a proof of claim with the bankruptcy court.
The creditor might well be uninterested in filing a proof of claim, because in most Chapter 13 bankruptcies he will end up receiving less than 100% of what he is owed. On the other hand, if the creditor refuses to file the proof of claim he can go after the debtor for the full amount due after the discharge. The key phrase here though is “after the discharge.” While the Chapter 13 plan is in affect the automatic stay forbids the post petition creditor from taking any action to collect the debt. On the theory that a bird in the hand is worth two in the bush, the new creditor may thus find himself with a genuine incentive to enter the Chapter 13 plan and start getting payments now.
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