Paying back debts after bankruptcy
Most people decide to file for bankruptcy to eliminate personal liability for their debts, to wipe their financial slate clean and pursue a fresh start. To be sure, personal bankruptcy is a very effective way of dealing with debt problems. Once you receive the discharge order from the court, your creditors cannot come after you for what you previously owed. This is the black letter law, creditors who attempt to collect debts that have been discharged through bankruptcy will find themselves in big trouble. However, many are surprised to learn that there is nothing stopping former bankruptcy debtors from voluntarily repaying creditors once their case has closed.
The bankruptcy fresh start
Many people, even those who are in dire financial circumstances, are extremely reluctant to file for bankruptcy because they feel it is immoral to leave creditors in the lurch. Let’s face it, there is a certain social stigma that still attaches to the word “bankruptcy.” No matter how insolvent, many people are desperate to avoid it. They just don’t feel comfortable not paying back debt, and who can blame them?
There is nothing stopping you from choosing to repay a creditor after bankruptcy
We all want to honor our obligations, but bankruptcy doesn’t necessarily prevent you from paying back your creditors. Sure, you’ll be under no legal compulsion to do so, but there is nothing stopping someone who has filed for bankruptcy from choosing to pay back their debts.
For example, let’s say that you borrowed money from family or friends and have recently filed for bankruptcy. There is nothing in the bankruptcy code which says you can’t voluntarily pay them back once your case closes. In fact, you have the choice of paying back even your most aggressive creditors after filing for bankruptcy.
The only difference is that these creditors no longer have the option of trying to collect from you and any repayment can be made on your terms. Send the credit card company a monthly check for $5.00 if it makes you feel better, you won’t be in violation of the terms of your discharge.
One important note
One important note: while there’s nothing stopping a debtor from repaying creditors after bankruptcy, repaying creditors, especially family and friends, before bankruptcy can have serious ramifications in your bankruptcy case. If you’re contemplating bankruptcy, do not pay back family or friends until you’ve consulted with an attorney.
Image credit: Jason Glerum