Getting Permission to Incur New Debt - Chapter 13 (2024)

FAQs

Getting Permission to Incur New Debt - Chapter 13? ›

If you need to incur new debt, you must first obtain written approval from the Chapter 13 Trustee. Your request may be approved if you are paying regularly into your Chapter 13 plan, if there is a good reason to incur the debt, and if your ability to pay your plan payments will not be threatened.

Generally, the court will approve new debt, or an extension of credit, if you need to buy property or services to complete your plan. If are able to get prior approval, you can include the debt in your plan if the creditor files a proof of claim.

However, you should be aware that your Chapter 13 trustee may object and ask the court to dismiss your case if you spend so much on the new debt that you miss your Chapter 13 payments. In most cases—except for medical emergencies—it is wiser to ask the trustee and the court for permission before incurring any new debt.

The Motion to Incur Debt gives the debtor permission to purchase a home/car/or something else through a loan that will be paid outside of the Chapter 13 Bankruptcy Plan. The debtor still obviously needs to get approved a finance company that is willing to give a loan to someone in a Chapter 13 Bankruptcy.

Any Chapter 13 debtor who receives an objection to confirmation should first take a deep breath and relax. Then, they should pick up the phone and call their bankruptcy attorney and ask for an explanation of the objections. In the vast majority of cases, the objections can easily be fixed.

Do I have to include all my debts? When you file any type of bankruptcy case, you must list all of your debts and all of your assets. In Chapter 13, however, you can often propose a plan that treats debts differently depending on the type of debt.

Yes, it's possible, but likely not for long. Your first option is to approach the Chapter 13 trustee. In some instances, the Chapter 13 trustee will defer payment for a month or two. But you should anticipate increasing your monthly payment until you catch up.

Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's combined total secured and unsecured debts are less than $2,750,000 as of the date of filing for bankruptcy relief. 11 U.S.C. § 109(e).

In summary, a Chapter 13 bankruptcy can fail for lots of reasons. These could be inadequate repayment plans, failure to make plan payments, changes in your financial circ*mstances, failure to do those required courses, filing too soon after previous bankruptcy, and filing without legal representation.

This is known as a percentage plan and can vary from 1% - 99%. A 100% plan indicates that the petitioner does not qualify for debt reduction based on their income and ability to pay. This Chapter 13 plan structures 100% of that client's debt to be paid back through the repayment process.

How do I write a letter of debt waiver? ›

I respectfully request that you forgive my alleged debt, as my condition precludes any employment, and my current and future income does not support any debt repayment. Please respond to my request in writing to the address below at your earliest convenience. Thank you in advance for your understanding of my situation.

Unfortunately, my circ*mstances are unlikely to improve in the foreseeable future and I have no assets to sell to help clear my debt. I am therefore asking you to consider writing off my debt as I can see no way of ever repaying it. If you are unable to agree to this, please explain your reasons.

Trustees do not monitor your income during the course of your repayment. However, a trustee possesses what Ginter terms “broad powers” and responsibilities. They include: Determining if you qualify for Chapter 13 bankruptcy.

The trustee can ask you about anything related to your financial situation, and most questions will involve your debts, assets, income, expenses, and, importantly, prior transactions. The trustee will be looking for information that could increase recovery for your creditors.

After you file your bankruptcy petition, creditors will be given the opportunity to object to your repayment plan. They may do so for a number of reasons, including: Feasibility of the plan - A creditor may believe that you do not have the ability to repay the debt under the proposed plan.

Why Would a Chapter 13 Be Dismissed? Most Chapter 13 cases are dismissed because the debtor fails to make monthly payments. In Chapter 13 bankruptcy, the debtor must pay back some or all of the debts through a repayment plan. If the debtor stops making the plan payments, the court will dismiss the case.

As a general rule, debts not listed in a Chapter 13 and that do not otherwise get notice of the bankruptcy are NOT discharged upon completion of the case. If you discover an omitted creditor after filing, you should tell your attorney immediately. Normally, Notice of Filing should be sent to the creditor ASAP.

If you want to pay off your plan early, you must notify your creditors and get court approval. Creditors and the bankruptcy trustee will have the opportunity to object to your early payoff—and you should expect them to do so.

Many types of taxes can be included in Chapter 13—IRS debt being the most common.

If you can't make your plan payments, you might be able to modify (change) them during your Chapter 13 case. If your Chapter 13 payments are too high, you have options. The preferred option is modifying the Chapter 13 plan payment.