incurring new debt during Chap 13?

[Peasey]

Is it possible to incur new debt while in chapter 13? We have filed already and we'll be in a 100% payback plan. We'd like to borrow ~$2000 to $2500 to replace our HVAC, but I'm not sure how to go about it. The unit isn't completely broken, but it's not far off. We'd be paying cash for a chunk of it, but the rest would be short-term financed. Does it matter what the money is for?

Thanks!

FWIW - I already have a call in the Atty's office, but I'd just like some personal experience info.

-Brian

[justbroke]

In order to incur new debt, you first need to look at your Confirmation Order to read any restrictions placed on new debt. There is almost always a paragraph indicating that you absolutely cannot incur any new debt or that you can only incur new debt up to a certain amount (usually $500 or so), without permission of the Court.

Otherwise, you, through your counsel, would submit a Motion to Incur Debt to the Court and have it approved. If it's for home repair (not improvement), it will usually be approved if the new payment on the new debt doesn't become an undue hardship given the existing Chapter 13 Plan payment.

[Peasey]

Wow, thanks for the info. Our proposed plan payment is such that we have plenty of breathing room above what will be auto-drafted. Ideally we will be paying everything with cash, but if time is an issue, we'll have to finance.

[justbroke]

I see that you're not confirmed yet. This is definitely a question for your attorney on how to proceed to incur new debt. I don't know what the impact of being "pre-confirmation" is on acquiring new debt.