When potential chapter 13 bankruptcy client comes in for a consultation, the number one question they have is, “what if I have to incur new debt while in a chapter 13 bankruptcy?” This is a legitimate question, as a chapter 13 bankruptcy payment plan generally last for 3-5 years in which a debtor is on a fixed budget. If new debt must be incurred, then a debtor must inform the chapter 13 trustees office and file a motion in the bankruptcy court requesting to incur new expenses. As long as the new debt is reasonable, there is a good chance the bankruptcy court will approve the new debt. Read this chapter 13 bankruptcy article for more on this subject. In the Western District of Washington, if a new vehicle needs to be purchased the chapter 13 trustee’s office has debtors fill out a form that can be sent directly to the trustee’s office, which means no motion would have to be filed. If the vehicle request is reasonable, your request will be approved.
In Washington state all auto loans incurred prior to the bankruptcy filing must be paid through the bankruptcy plan. If a new auto loan is obtained after the bankruptcy filing it may be paid outside of the plan and directly to your creditor. If you income happens to decrease you might want to talk to your bankruptcy attorney about the possibility of being able to convert your chapter 13 case to a chapter 7 case or filing a motion with the bankruptcy court to modify your payments due to a decrease in the current household income. If it can be shown that a debtors income has significantly decreased and that they can’t make their current chapter 13 plan payments, the motion will be approved and is usually unopposed by the chapter13 trustee’s office.
If you have additional questions please call Symmes Law Group at 206-682-7975 to speak to a qualified bankruptcy attorney today.