What Can You Not Do After Filing Bankruptcy

Taking on New Debt Without Court Approval

The moment you file bankruptcy, you cannot take new credit over $1,000 without court permission. This includes credit cards, personal loans, car financing, and even payment plans for furniture or appliances. Violate this rule and the new debt becomes non-dischargeable. You owe it forever.

Chapter 13 filers face stricter rules. Any credit during the 3 to 5 year plan period requires trustee approval. Want to buy a car because yours died? File a motion, explain why, show you can afford payments alongside your plan. The process takes 2 to 4 weeks minimum.

What Counts as Taking Debt

The definition is broader than most people expect. Signing up for a gym membership with monthly payments creates debt. Starting a phone contract creates debt. Even buy-now-pay-later services like Affirm or Klarna count. If you owe money to someone new, you created debt.

Transferring or Hiding Assets

Giving away property after filing bankruptcy is fraud. Full stop. That boat you transferred to your brother? The trustee will claw it back. Those tools you sold cheap to a friend? Same result. The bankruptcy estate includes everything you own at filing, and the trustee controls what happens to it.

Trustees have powerful investigation tools. Bank records, tax returns, property records, and even social media posts reveal asset movements. The lookback period extends before filing too. Transfers within two years before filing can be reversed if made with intent to defraud creditors.

Paying Family Members or Friends You Owe Money

Paying back your mother before filing looks natural but creates legal problems. The bankruptcy code treats payments to "insiders" made within one year before filing as preferential transfers. Trustees can sue your mother to recover the money for distribution to all creditors equally.

Regular creditors have a 90-day lookback window. Paid off one credit card completely while letting others default? That payment might be clawed back if it exceeded $600. The theory is simple: all unsecured creditors deserve equal treatment.

Failing to Disclose Income or Assets

Your bankruptcy schedules must list every asset and every income source. Miss something and you risk discharge denial. Intentionally hide something and you risk criminal prosecution. Federal bankruptcy fraud carries up to 5 years in prison and $250,000 in fines.

Side income catches people constantly. That $500 monthly from selling crafts on Etsy? It belongs on your schedules. Cash payments from occasional work? Same deal. Trustees review tax returns and bank deposits to catch unreported income.

Cryptocurrency is a growing problem area. People assume digital assets are invisible. They are not. Courts now routinely ask about crypto holdings. Exchanges report to the IRS.

Special Rules for Chapter 13 Filers

Chapter 13 imposes additional restrictions for the full plan period. You must make every single payment on time. One missed payment triggers a motion to dismiss. Two missed payments almost guarantee dismissal unless you have extraordinary circumstances.

Tax filing becomes mandatory. You must file federal and state returns every year during your plan. Refunds may be partially or fully claimed by the trustee depending on your plan terms. Failing to file returns can result in plan dismissal.

Job changes require notification. Significant income increases may trigger a plan modification increasing your payment. Income decreases can justify payment reductions but require a formal motion.

"Most violations stem from not understanding what changes the moment you file. The automatic stay protects you from creditors but also restricts your actions." — Jeffy Goetz, Bankruptcy Attorney

FAQ

Can I use my credit cards after filing bankruptcy?
No. Credit cards included in your bankruptcy are frozen immediately. Using them after filing creates non-dischargeable debt and potential fraud liability. New credit card applications during bankruptcy require court approval.

Can I keep paying my car loan after filing?
Yes, continuing secured debt payments is expected if you want to keep the collateral. Your car payment, mortgage, and similar secured debts should be paid on schedule. The automatic stay prevents repossession as long as you stay current.

What happens if I win the lottery during bankruptcy?
Lottery winnings become property of the bankruptcy estate if won within 180 days of filing Chapter 7. The trustee can use these funds to pay creditors. In Chapter 13, unexpected windfalls typically require plan modification.

Can I travel during bankruptcy?
Domestic travel is generally unrestricted. International travel during active Chapter 7 cases may require notification to your attorney. Chapter 13 filers should avoid luxury vacations that suggest disposable income not reflected in plan payments.

Can I sell my house during bankruptcy?
Yes, but you need court approval. The trustee reviews the sale to ensure it is at fair market value. Exempt equity goes to you. Non-exempt equity goes to creditors.

What if I accidentally violate a bankruptcy rule?
Disclose the violation to your attorney immediately. Honest mistakes handled proactively usually result in amended schedules or modified plans rather than dismissal. Hiding violations is far more damaging than the original error.