New credit cannot be obtained without first obtaining permission of the court or the Trustee.

Occasionally a debtor in a Chapter 13 Bankruptcy Case seeks authorization to purchase a vehicle or a home or to refinance an existing home mortgage. In order to properly evaluate that request, the Office of the Chapter 13 Trustee needs information that will demonstrate that the Debtor can undertake the new obligation without any adverse impact on the funding of the Chapter 13 Plan.

IT IS STRONGLY RECOMMENDED THAT THE DEBTOR CONTACT HIS/HER ATTORNEY TO ASSIST IN SUBMITTING THE NECESSARY DOCUMENTS TO THE TRUSTEE TO AVOID ANY UNNECESSARY DELAYS IN OBTAINING A RESPONSE. AS A GENERAL RULE, A RESPONSE WILL BE MAILED/FAXED WITHIN ONE WEEK OF RECEIPT OF THE REQUEST. MAKE SURE THAT YOU PLAN ACCORDINGLY.

In order for the Trustee to approve a request for new credit, you must provide the following:

• A written statement from your attorney that the proposed credit transaction is in your best interests and will not negatively impact your ability to meet your obligations under your Chapter 13 plan
• A current budget
• A statement from you detailing the reason for the need for the new credit
• You must be current with all income tax requirements under the terms of your Chapter 13 plan
• You must be in compliance with Plan payments under the court’s order confirming your plan
• Your Chapter 13 Plan must be feasible
  

To purchase, lease or refinance a motor vehicle

The Trustee’s Office needs the following information, as may be appropriate:

• A written request for permission to enter into the agreements for the purchase, lease or refinance of a motor vehicle
• Make and model of vehicle to be purchased
• Purchase price
• Amount to be financed
• Interest rate to be paid
• Monthly payment required
• Term of the repayment
• Amended budget from debtor or attorney to explain how that monthly payment can be made by the debtor without jeopardizing the Chapter 13 Plan
• A written statement from the debtor’s attorney to confirm that the attorney has reviewed the purchase/finance agreements and believes them to be in the debtor’s best interest
• Copies of purchase/finance proposals where available

To purchase or refinance a home

The Trustee’s Office needs the following information, as may be appropriate:

• A copy of an accepted offer to purchase and/or loan commitment letter
• Amount to be financed
• Interest rate to be paid
• Monthly payment for Principal, Interest, Taxes and Insurance
• Amended budget from debtor or attorney to explain how that monthly payment can be made by the debtor without jeopardizing the Chapter 13 Plan
• A written statement from the debtor’s attorney to confirm that the attorney has reviewed the purchase/finance agreements and believes them to be in the debtor’s best interest