Incurring debt while in a Ch 13

[Nicollette]

I'm currently in a Ch 13, and I've decided to surrender my vehicle because it is costing me too much in mechanical repairs. After I surrender it, if I was to incur debt such as getting another vehicle without the trustee's permission, what could happen? Would my case be dismissed? Is this considered fraud? Is there a way he could find out as long as my payments to my plan are current?

Does the trustee from time to time monitor a debtor's credit report?

[BKParalegal]

No, there isn't any seceret squirrel society that Trustee's belong to that will alert them to you incurring debt without their knowledge. But, I do not know of any legit finance company that would give you a loan without seeing the order granting a motion to incur new debt. And when and if, the trustee does ever find out you incurred debt without permission, they could and probably will file either a motion to dismiss, or a motion to show cause.

Good Luck

[oldrocker]

Have you checked to see if there is a certain amount of debt you can take on without the trustee's permission? In my district we can take on up to $5000 in new debt without his permission.

[NowImDownInIt]

I don't think any dealership will finance you without a letter from the trustee stating that you motion to incur new debt has been approved... more than that, I wouldn't even attempt to do something like that behind my trustee's back..

[Nicollette]

I think I've decided that I'm just going to surrender my current vehicle that is in my plan, and possibly just buy a $2000 or $3000 vehicle when I get my tax refund in February. Would I need permission to just buy a vehicle like this even though I would have the clear title? No lienholder involved?

Also, what is the process of surrendering a vehicle and how long does it take? Is this something that I will need to appear in court for?

[chloe0724]

Do you really get your refund? I'm only allowed to keep $250 of mine.

[Nicollette]

My case was filed 5/2007, and so far I got this past refund earlier this year. It didn't say anywhere in my plan that the trustee would be keeping my refunds.

[liz417]

Hi Nicollette,

Remember, your plan was also based with your car payment, if you are going to get a good used car with your tax refund (I would still double-check with Trustee), your repayment amount may increase because you'll have more disposable income.

Good Luck!

[Nicollette]

Hi Liz,

I understand what you are saying, and I'm also aware of the fact that if I surrender my car, I will be responsible for the deficiency balance, of what they don't get from the sale. My concern is, my attorney acts like he wants me to keep the car, and he doesn't think the trustee will allow me to incur the debt of getting another car. Well, I have all these repairs that need done, like $3000 to $4000 worth of work that need done asap, and truthfully, I don't think my car will last the 33 more months that I'm in my plan. I wasn't able to do a Ch 7, because of my income. Why would my attorney, and the trustee want me to stay in a car that is nickel and diming me every time I turn around?

[liz417]

Hi Liz,
I understand what you are saying, and I'm also aware of the fact that if I surrender my car, I will be responsible for the deficiency balance, of what they don't get from the sale. My concern is, my attorney acts like he wants me to keep the car, and he doesn't think the trustee will allow me to incur the debt of getting another car. Well, I have all these repairs that need done, like $3000 to $4000 worth of work that need done asap, and truthfully, I don't think my car will last the 33 more months that I'm in my plan. I wasn't able to do a Ch 7, because of my income. Why would my attorney, and the trustee want me to stay in a car that is nickel and diming me every time I turn around?

You are right, I wouldn't stay in a car that was nickel and diming me and breaking my budget every month. Maybe your attorney doesn't want to have to file paperwork/ask the Trustee for permission. I would ask my attorney straight out. Did you reaffirm to car?? If not, you may be off the hook...

Good Luck!

[Nicollette]

Liz,

I'm assuming I reaffirmed my car because my car payments are included in what I pay to the trustee. Are you saying that since it's reaffirmed, I can't surrender it?

[NowImDownInIt]

Liz,

I'm assuming I reaffirmed my car because my car payments are included in what I pay to the trustee. Are you saying that since it's reaffirmed, I can't surrender it?

That doesn't necessarily mean that you reaffirmed. I would go through your paperwork that you filed.

[lrprn]

I'm assuming I reaffirmed my car because my car payments are included in what I pay to the trustee. Are you saying that since it's reaffirmed, I can't surrender it?

Nicollette, that's a huge and very risky assumption. You need to confirm with your lawyer whether you reaffirmed your car AND whether the lender agreed to the reaffirmation. That's crucial to know *BEFORE* you do anything with the car.

Call your lawyer tomorrow and get the ball rolling. Also ask him/her why he/she thinks it's not a good idea to surrender your car. Don't go forward with any decision until you have all the facts.

Please be aware also that since you are in an active Ch 13 that even with your trustee's permission, your chances of getting a car loan from any lender in the current horrible economic circumstances are near zero, even from a 722 redemption lender with sky-high interest near 20%. Can you pay cash for a "beater" car of any kind?

[Nicollette]

That's what I was thinking of doing was possibly paying cash for a vehicle. Maybe $2000 or $3000 when I get my tax refund in Feb. It is so hard to try and talk to my attorney, himself. Everytime I call, the paralegal gives me info, and always tells me he's in court. I can never talk directly to him. I have to get my BK papers out and look through them to see if I reaffirmed. My question is, if I did reaffirm, what consquences would I be facing if I did to surrender it?

[krielly]

I'm a little confused. I'm in a 13, and my understanding is that reaffirmation applies to Chapt 7 only. If you are in a 13, you simply keep paying your secured debt to retain it.

I remember that 3 years ago, when we filed, the question came up by one of our creditors, and my attorney said reaffirmation applied to Chapt 7 only.......