Chapter 13 Bankruptcy – Needing Money to Borrow a Car

When you are in a Chapter 13 Bankruptcy the court has control over your finances under the plan you and your attorney agreed to and the creditors accepted. So in that plan you have agreed to pay the creditors a certain amount to settle the debts you have. When you have such an agreement, the amount is basically your net income after all allowable expenses are deducted. So, when you then decide to get a car and need to borrrow to get it, there are some steps you must take to get approval with the court. There is a motion before the court to modify the plan and enable you, the debtor to borrow the funds needed to get the car. If the motion is approved by the court and there are no objections, then you can proceed to borrow. Many times this will either create less paid out to the creditors because there is now a new debt that has to be serviced.  Sometimes though, the new car is purchased because there is an increase in income and so the other creditors are treated the same. If the creditors are treated the same in the plan, there is little likelihood that they will object to the new borrowing. If the creditors receive less after the new borrowing, then there is a good chance that the creditors will object to the change.

If you find yourself in such a situation, please work with an attorney who is well versed in such issues. There are very few attorneys who have experience dealing with Chapter 13 bankruptcies and far fewer yet who have any idea how to modify a plan to allow for a new car loan.  Call us for help.

Todd Courser 810-245-0813