QUESTION
Can you borrow money while still under chapter 13?
Asked on Dec 27th, 2013 on Bankruptcy - California
More details to this question:
Have one year left under our Chapter 13 and I want to borrow $1000 from our 401K, which we intend to repay in 2 months, as coming up short to pay taxes and car repairs. How would trustee find out if not reported must a 'motion to incur debt' really be filed for such a small amount and time?
7 ANSWERS
The bankruptcy code requires permission be granted to obtain a loan while in bankruptcy. If you did take the loan it will likely show up on your paystubs or taxes and the trustee could file a motion to dismiss your case if their office didn't know about it. It seems you have legitimate needs and the court may likely allow the loan.
Answered on Jan 02nd, 2014 at 10:20 AM
Bankruptcy Attorney serving Bend, OR
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Albertazzi Law Firm
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Yes, you can. However, you need to get permission from your trustee. Contact your attorney to discuss this. Do not borrow the money until you get the approval. Oregon bankruptcy trustees have very good websites with information about this.
Answered on Dec 30th, 2013 at 7:30 AM
How would "someone find out" is a question that makes any ethical attorney cringe! If you agreed not to borrow money without court approval, whether someone finds out is not the point. The entire point of being in a Chapter 13 is to obtain a discharge by complying with a court order. You can dance on the edge of a cliff if you like, but when you do get caught, the consequences could be enormous.
Answered on Dec 30th, 2013 at 6:55 AM
bankruptcy Attorney serving Paul, ID
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Paul N. J. Ross Law, PLLC
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In Idaho you must contact the Trustee. However, usually with some documentation of proof of what it is to be used for a receipts after the fact, it is not an issue.
Answered on Dec 30th, 2013 at 6:28 AM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Depends on your confirmation order regarding the incurrence of a debt. The Trustee would find out because you are a law abiding citizen and would tell him voluntarily if required by the order to do so.
Answered on Dec 27th, 2013 at 8:00 PM
Bankruptcy Law Attorney serving Livingston, NJ
Partner at
Law Office of Stuart M. Nachbar, P.C.
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Trustee will find out, and yes you should file the motion to be safe.
Answered on Dec 27th, 2013 at 8:00 PM
You need to call or have your lawyer call your trustee's office and find out whether you need to file a motion, or whether she will approve by a stipulation. Don't do anything to put your bankruptcy at risk.
Answered on Dec 27th, 2013 at 7:59 PM