Need For Credit or Financing

While in your Chapter 13 bankruptcy you are under the court’s restriction not to incur new debt in excess of $4,999.00 without prior court permission.  This restriction applies to all debt, including student loans, vehicle lending, home repairs, even tax refund loans.

If you find yourself in a situation where you need financing for a “necessity” (please read this to mean a reasonable “need” not an a “want”) please discuss your situation and need with your attorney before taking any action to incur a debt.

If the financing is over $4,999.00, your attorney will ask that you provide detail information and a contract if available showing the amount to be borrowed, the interest rate, the term of the loan, and the monthly payment.  With this information the attorney will file a “Motion to Incur”.  There will be a hearing before a judge, which you will have to attend.  If the judge considers your request reasonable and necessary he may grant it.  This permission must be granted prior to incurring the debt.

WARNING:  By requesting the court to review your Motion to incur debt, your overall financial situation will be reexamined as part of the process.  Should there have been other changes such as an increase in income or reduction in expenses you could also be faced with an increase in your monthly Chapter 13 payment.