Personal Loan in Chapter 13: Is It Possible?

December 7

Personal-Loan-in-Chapter-13Filing for bankruptcy is a big step, but a step in the right direction toward a stress-free financial situation. If you’re considering choosing Chapter 13 and wondering whether you could take out a personal loan during the process, you’re in the right place.

We’ll break down Chapter 13 bankruptcy and explore the possibility of a loan. When you decide to get started, an experienced bankruptcy attorney in Oceanside can assist you throughout the proceedings.

How does Chapter 13 work?

If you choose Chapter 13, you will devise a repayment plan for all or part of your debts. Typically, the plan lasts three to five years depending on the amount of debt, your monthly income, and the state median income. During this time, your collectors are not allowed to start or continue any collection activities.

Can I get a personal loan during Chapter 13?

As the repayment plan lasts a long time and considering the current economy, there’s a chance you may need to take out a loan during this time – whether it’s to cover unexpected medical bills, purchase a new car if your old one broke down, or pay taxes.

Before you take this option into account, you may also be able to:

  • Adjust or postpone your monthly payments, especially if the expenses you need to cover are temporary. You should ask a bankruptcy attorney whether this would be possible in your specific situation and whether your Chapter 13 trustee would agree to it.
  • Modify the plan until your financial situation improves, for example, if you lose your job. For long-term changes to the plan, you have to file a motion to request a modification.

If incurring new debt is your only option, you should know that in most cases you need the court’s permission. You need to show the trustee and the court why you require a loan and that you’ll keep up with the repayment plan.

How can I get the court’s permission to take out a loan?

The process of getting permission varies, so you should consult with knowledgeable bankruptcy lawyers, such as the team at Chang & Diamond to ensure you don’t make any mistakes and give yourself the best chance of success.

Here’s an example of the steps necessary to get permission for a car loan during Chapter 13:

  1. Get a sample financing statement with the terms of your desired loan, such as its duration, monthly payments, and interest rate. You can take this from the car dealership along with the basic information about the car you want to buy.
  2. Obtain and fill in the trustee’s documents.
  3. File a motion to request the court’s permission.
  4. Send it to the trustee and your creditors.
  5. Attend a hearing in court.
  6. Provide a copy of the court’s order to the lender if the court grants you permission.

How-does-Chapter-13-workWhich bankruptcy attorney in Oceanside can help me file Chapter 13?

Regardless of which Chapter you decide on, whether you need to take out a loan, or whether you have an ex-spouse, Chang & Diamond is at your disposal! We are experienced attorneys specializing in bankruptcy matters. You can rest assured we’ll answer all your questions and explain the process in detail while guiding you through it and representing you.

Let us do all the work so that you can relax and focus on building your new future without debts holding you back. With our expert assistance and support, you’ll be having a worry-free stroll along the Oceanside beaches in no time.

Reach out to us today and set up your free initial consultation with our team!