Bankruptcy

Spending After Filing

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    Can I Spend Money After Filing Bankruptcy?

    Yes — you can spend money after filing bankruptcy. Bankruptcy does not mean you stop living your life. However, how and what you spend matters, especially while your case is pending.

    This page explains:

    • What spending is allowed

    • What spending requires approval

    • What spending can cause problems

    • How the rules differ in Chapter 7 and Chapter 13

    The Basic Rule

    After filing bankruptcy:

    • ✔ Ordinary, necessary living expenses are allowed

    • ❌ Large, unusual, or credit-based spending can cause problems

    When in doubt, ask before you spend.

    Spending That Is Generally Allowed

    You may usually spend money on:

    ✔ Normal Living Expenses

    • Rent or mortgage payments

    • Utilities

    • Groceries

    • Gas and transportation

    • Childcare

    • Insurance

    • Medical expenses

    These are expected and permitted.

    ✔ Necessary Repairs and Maintenance

    • Car repairs needed for work

    • Basic home maintenance

    • Emergency medical or safety expenses

    Keep receipts whenever possible.

    ✔ Reasonable Personal Expenses

    • Clothing

    • School supplies

    • Modest personal items

    Reasonableness is the key standard.

    Spending That May Require Approval

    Certain expenses may require court or trustee approval, especially in Chapter 13:

    ⚠️ Large Purchases

    • Vehicles

    • Furniture

    • Appliances

    • Electronics

    ⚠️ Using Credit

    After filing, you generally cannot:

    • Use credit cards

    • Take out loans

    • Finance purchases

    Without permission, this can violate bankruptcy rules.

    ⚠️ Gifts and Transfers

    • Large gifts to others

    • Transferring money to family or friends

    These can look like attempts to hide assets.

    Spending That Can Cause Serious Problems

    Avoid the following unless approved by your attorney:

    ❌ Luxury or unnecessary purchases
    ❌ Large cash withdrawals
    ❌ Gambling or speculative investments
    ❌ Transferring money to others
    ❌ Repaying old debts without approval

    These actions can lead to trustee objections or worse.

    Chapter 7 vs Chapter 13: Key Differences

    Chapter 7

    • Case is typically short

    • Spending is less restricted

    • Windfalls and asset purchases must still be disclosed

    • Large purchases can raise red flags

    Chapter 13

    • Oversight lasts 3–5 years

    • Budget discipline is required

    • New debt usually requires court approval

    • Trustees may review bank statements periodically

    Chapter 13 has much stricter rules.

    What About Cash on Hand When I Filed?

    Cash listed on your schedules:

    • Is part of the bankruptcy estate

    • May or may not be protected by exemptions

    You should not assume you can freely spend large amounts without guidance.

    What If I Need to Make an Emergency Purchase?

    Emergencies happen.

    If you need to:

    • Repair a car

    • Replace essential appliances

    • Cover urgent medical costs

    Contact your attorney first. Approval can often be obtained quickly.

    Common Myths About Spending After Filing

    “I can’t spend any money at all.”
    False.

    “If it’s my paycheck, it’s fine.”
    Not always — disclosure may still be required.

    “Small cash withdrawals don’t matter.”
    Patterns matter more than individual amounts.

    Best Practices to Protect Your Case

    ✔ Keep spending reasonable
    ✔ Save receipts
    ✔ Avoid cash when possible
    ✔ Don’t transfer money to others
    ✔ Ask before making big decisions

    One Rule That Keeps You Safe

    If you’re unsure whether you can spend the money — ask first.

    That one step prevents most post-filing problems.

    Talk to Your Attorney Before Major Spending

    Bankruptcy is meant to give you a fresh start — not trap you in fear. Spending wisely and communicating with your attorney keeps your case on track.

    Ginsburg Law Group helps clients understand post-filing rules, avoid mistakes, and protect their discharge.

     

    📞 Call us today for a free, confidential bankruptcy consultation – 855-978-6564 or email us at bankruptcy@ginsburglawgroup.com.

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    Contact our Bankruptcy Team: bankruptcy@ginsburglawgroup.com

    We work with most major legal services and legal insurance plans.  Some cover your legal fees for bankruptcy services.  Give us a call today to see if your bankruptcy is covered!

    BANKRUPTCY TEAM

    AMY GINSBURG – aginsburg@ginsburglawgroup.com

    GRACIE KLEIN – gklein@ginsburglawgroup.com

    NICOLE LOMBARDI – nlombardi@ginsburglawgroup.com