Motions to Incur Debt in a Chapter 13

Whether the process of getting permission to incur debt to purchase a house or a vehicle can be expedited?

This issue is, in my opinion, the most troublesome problem in the Chapter 13 system (of course, excluding the current pandemic). Typically, a debtor who needs to replace a vehicle needs to make a purchase quickly. She needs to go to work to fund her Chapter 13 plan and she cannot do so without transportation. Her children need to go to school, doctors and soccer games. Further, the car lot will not hold the vehicle for very long.

What can be done to speed the process?

An applications to incur debt can be made to the Standing Chapter 13 Trustee on a standardized form. The Trustee reviews the circumstances-need-ability to pay-interest rate-term-impact on plan payment-etc. Then, a joint agreement can be submitted to the Court for review.

The efficacy of such a process is based on the fact that the Trustee has access to the applicable information – pay history-income-special circumstances of the debtor-and direct communication with debtor and debtor counsel.

When presented to the Court, all the relevant information will have been gathered.