Loans In Chapter 13

When you file for bankruptcy, you don’t stop needing money to live day-to-day. There are many reasons why you might need a loan or credit for new, unexpected, or necessary expenses like vehicle loans, student loans, and mortgage or refinance loans. However, it is not always easy to secure a new loan while in bankruptcy or even shortly after you complete a bankruptcy. Further, there are some lenders that engage in predatory lending of current or post-bankruptcy consumers. So, what options are available, and safe, for consumers in bankruptcy that need additional money to cover essential expenses.

There are two ways in which you may be able to secure a loan while in an active Chapter 13 bankruptcy:

After-petition debt: A debtor may not accrue new debt of more than $1,000 once the petition is filed without the court’s prior approval. The debtor must submit an application to incur the obligation. Without holding a hearing, the court may grant the application if no objections are raised.

The debtor must file an application to purchase real estate. This includes real estate that would be used for the debtor’s personal residence and refinance loans that change the terms of the debtor’s current mortgage loan. The debtor must show that the new loan would be affordable, reasonable, and not cause unfair treatment to unsecure creditors in the case.

Bankruptcy guidelines can vary by state and may not apply to the unique financial situation of every consumer. Successfully navigating the bankruptcy process requires the expertise of an experienced Roseville bankruptcy attorney.