Motion to Incur Debt

[wannaknowleo]

Looking for some thoughts from those that had to file a motion to incur debt for an auto loan. I'm from SE Michigan and wanted to know how difficult it was and what type of review process you must go through. I've been under the radar for the past three years, but my transportation has died (10 yrs old) and I need reliable transportation for work and personal use.

I completed a bad credit loan application online and to my surprise was approved for a loan up to 30K, although I will be using much less than that amount for a gently used vehicle. I don't even know if I was suppose to seek the loan approval first before getting permission to do so, but it might be okay since I haven't incurred any new debt and plus my loan documents states that I must have a letter of permission from the trustee to fund the loan.

So in essence, what's the review process and how quickly can I expect to hear an answer from the trustee's office. Also, I will surrendering the vechicle that has died since its included in the ch. 13. I have two years left and I was hoping to not have to ask permission for anything so any advice would be greatly appreciated.

[wannaknowleo]

Hi, what documentation did you have to submit to your attorney when you requested a motion to incur debt? I'm in the process now and wanted to know how closely they look at your current finances? Any advice would be greatly appreciated, thanks.

[justbroke]

Hi, what documentation did you have to submit to your attorney when you requested a motion to incur debt? I'm in the process now and wanted to know how closely they look at your current finances? Any advice would be greatly appreciated, thanks.

The Trustee and the Court are going to need to be able to insure that your plan is still viable, and that you can actually afford it without jeopardizing your case.

You typically should have Trustee approval prior to filing the Motion and many Trustees (and the Court) have a process in place for this. The typical documentation includes, but is not limited to;

• Explanation as to what the new debt is for (e.g. to replace your car)
• Explanation as to where you would get any required down payment
• An updated Schedule I/J
• Income documentation

This really depends on the process in your District. The Trustee is trying to weigh what you're asking and whether it keeps your plan feasible and does not hurt the unsecured creditors based on the existing plan.

If you know your Trustee's name, try looking up their Web site to see if they have information on Incurring new debt and the process surrounding such a Motion.


Note: You asked this in another (old) thread and I answered it there. I decided to merge those posts to this new thread. Please do not make multiple posts asking the same question. It dilutes the responses and can cause continuity issues with the discussion.

(Original Thread: http://www.bkforum.com/showthread.ph...-to-Incur-Debt)

[Air00Max]

What company did you use to apply for financing ??? I have my trustee approval but am having a hard time getting bank approved

[159515951]

It seems to me that this would only really work in cases where the payment for the new car is replacing a payment on an old car. Otherwise, I don't see how one can free up $350-400/month in cash without the trustee raising an eyebrow.

If you are successful, your interest rate is going to be insane and you're continuing the cycle of incurring debt. Have you looked into the cost to repair your current vehicle? I know it's attractive to have a car under warranty that gets repaired for "free", but the cost/benefit almost always works out in favor of making repairs. If the paid-off car needs $3,000 in repairs and will reasonably drive another 2 years afterwards before another major issue, any payment over $125 ($3,000/24) for a new car is a loss. Even a new (used) engine can be had for $3k or so on many cars.

And then there's everything else that goes along with the newer car, like higher insurance premiums.

I'm not preaching or telling you what to do here -- just offering a different perspective. Good luck either way.