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What do I do if I want to borrow money while I am in a chapter 13 bankruptcy?

 

People often want to replace a car that has died, get a new heating system, or get some other necessity while they are in a chapter 13 bankruptcy, and they need to borrow the money. If you want to borrow money while you have an active chapter 13 bankruptcy, then you need to get a copy of the terms of the proposed loan from the lender (the Good Faith Estimate should have most of the terms of the loan) and give it to your attorney. He will have to file a motion to incur debt for you, which may take 30 days or so to have approved. The bankruptcy trustee usually will consent unless the loan is for an unnecessary purpose or in an amount that is excessive, given your ability to pay and given the fact that you are in bankruptcy and may not be paying all of your creditors 100% under your plan. If the bankruptcy trustee consents, then you should get your loan.

The SC Courts haveĀ gotten particular about HAVING ALL OF THE SPECIFIC TERMS OF THE LOAN desired in the motion and the order or the relief will be denied. Also, the approval is limited to a short period of time, say, 60 days, and if the loan does not close, then the approval for one loan is not transferable to another.

If you are getting a loan which will pay off your chapter 13 bankruptcy, then the closing agent will need to obtain the written payoff from the bankruptcy trustee and send the funds to the bankruptcy trustee after the closing.

Normally, there is an extra charge for your attorney to obtain permission for you to borrow money.

 

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