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How to Get a New Car During a Chapter 13 Case
The process of acquiring a new car during a Chapter 13 bankruptcy case in the Eastern District of California Bankruptcy Court can seem daunting. However, with the right information and guidance from a reputable law firm like the Liviakis Law Firm, you can navigate this process successfully.
Chapter 13 bankruptcy is designed to provide individuals with a plan to repay their debts. It allows them to keep their assets, including cars, while they work through a repayment plan. However, if you find yourself in need of a new car during this period, specific steps must be followed.
Firstly, it is crucial to understand that the decision is not solely yours to make. The Bankruptcy Court and the Chapter 13 Trustee must approve your decision to incur new debt during the payment plan period. This process is referred to as “Motion to Incur Debt.”
After identifying the need for a new car, you must discuss this with your attorney. It is vital that you provide your attorney with necessary details such as the reason for the new car, the cost, the interest rate, and the term of the loan. Extravagant purchases and expensive lending terms often give the court reason to deny a motion to incur debt. Your attorney will then prepare the Motion to Incur Debt.
The Motion to Incur Debt might need to be filed along with an amended Chapter 13 plan that shows how you will afford the new car payment while continuing to make payments on your existing plan. This amended plan must be served on all your creditors, the Chapter 13 Trustee, and the U.S. Trustee. This process might renew an opportunity for creditors to demand more money during the remaining months of the chapter 13 case.
If there are no objections, and the Court finds that you have a need for the new car and the ability to make the payments, the Court will likely approve your motion. Upon receiving the court’s order approving your Motion to Incur Debt, you can proceed with acquiring the car.
Remember, the process of acquiring a new car during a Chapter 13 bankruptcy case is complicated and requires careful navigation. Consulting with a knowledgeable law firm like the Liviakis Law Firm can make a significant difference in your case. Reach out to us at 916 459 2364 for a free consultation.