QUESTION
Why can't I purchase a car while in Chapter 13 Bankruptcy?
Asked on Aug 13th, 2012 on Bankruptcy - New Jersey
More details to this question:
I have less than a year left on my Chapter 13 Bankruptcy. Why do I still have to get a letter of approval from my trustee? I am attempting to purchase a new vehicle.
14 ANSWERS
You can buy anything you like. Just pay cash. What you can't do is borrow money (>$1000) without the court's permission. It is because the 13 is supposed to help you out of trouble, not right back in.
Answered on Aug 15th, 2012 at 3:05 PM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Generally because the courts do not want to see you get into more financial difficulty while you are in their system. It would not make a good headline.
Answered on Aug 15th, 2012 at 3:05 PM
The Trustees are usually pretty liberal about approving post-petition car loans, as long as the car is needed and the interest rate is reasonable.
Answered on Aug 15th, 2012 at 3:05 PM
Meredith P. Ezzell
Because it is a requirement of Chapter 13 that you not incur additional debt without getting Court approval to do so. Most Courts have a local rule setting forth the amount of debt that can be incurred without approval. In the EDNC for example the threshold is $7500, if it is less Court approval is not necessary. Check with your attorney to determine the amount in your area.
Answered on Aug 15th, 2012 at 3:04 PM
Criminal Law Attorney serving Fremont, CA
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Steven J. Alpers, A Professional Corporation
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The bankruptcy law is attempting to keep you from plunging back into bankruptcy.
Answered on Aug 15th, 2012 at 3:04 PM
While your Chapter 13 bankruptcy is open, you have to get approval from the bankruptcy trustee to incur this type of debt. It doesn't matter if you have 10 months left or 10 days.
Answered on Aug 15th, 2012 at 3:03 PM
Criminal Defense Attorney serving Calabasas, CA
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Law Office of Bernal P. Ojeda
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A plan is based upon spendable income. If you increase your monthly expenses then you need to modify the plan.
Answered on Aug 15th, 2012 at 3:03 PM
Daniel James Wilson
Because you are supposed to be paying all your disposable income into the plan. All jurisdictions are different, in Colorado it is a fairly simple procedure to get the trustee to sign off.
Answered on Aug 15th, 2012 at 3:02 PM
Chapter 13 Bankruptcy Attorney serving Bloomington, MN
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Gregory J. Wald
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The lenders want permission from the trustee before they make the loan. If you contact the trustee and request a "loan letter", they will normally send one to the lender. The letter states that the trustee has no objection to the loan as long as you can continue to make your chapter 13 plan payment. This generally satisfies the lenders.
Answered on Aug 15th, 2012 at 3:01 PM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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Probably because that is what the lender requires in order to give you a loan.
Answered on Aug 15th, 2012 at 3:01 PM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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Because that is the price you pay for being in a chapter 13. You cannot buy or sell anything of substantial value without involving either the trustee and/or the court.
Answered on Aug 15th, 2012 at 3:00 PM
Under the Bankruptcy Code, any new debt to be incurred over $500 requires court approval. It is actually a motion filed and it goes before the Judge assigned to your case. It is not the Trustee's decision. It is a fairly simple motion and your Bankruptcy Attorney should have no problem filing it for you.
Answered on Aug 15th, 2012 at 2:59 PM
Chapter 7 Bankruptcy Attorney serving Milwaukee, WI
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Law Offices of Deborah A. Stencel
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If you need a car and can afford it without compromising your plan payment, the trustee will likely approve the purchase. Ask your attorney about the procedure, but usually it is just a matter of providing the trustee the terms. By the way, the creditor will not be likely to lend you the money without the court's ok.
Answered on Aug 15th, 2012 at 2:59 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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You can. Your attorney would have to file a Motion under 11 USC 363 to allow you to enter into financing for it, but you can. You need to speak with a qualified bankruptcy attorney, but based on your question, generally you can.
Answered on Aug 15th, 2012 at 10:39 AM