Questions and Answers
QUESTION 1: I need to buy a car to get to and from work…Can I purchase a car while in Chapter 13?
ANSWER: You can buy a car while in Chapter 13, with court approval, to provide needed transportation. If you find you need to buy a car, do the following:
1. Do a little shopping. Look around to see what you can get for a payment you can afford. I have had the Chapter 13 Trustee approve car loans in amounts from $150 per month to $450 per month. Use these payments as a rule of thumb. Remember, payments are made outside Chapter 13, directly to the lender. Many lenders do not want to work with you until you have court approval. Work through this if you can. You need to get an idea of what you can buy with a monthly payment you can afford, and you need to know if you will need a down payment. Don't forget to bring a pay stub for you and your husband if you are married when you come in to seek permission.
2. Once you have done your shopping, gather current pay stubs for yourself (and your spouse if you are married). Then sit down and prepare a budget to see if you can afford to add a car payment to your present budget.
3. After careful review of you budget, make an appointment to come to the office to redo your budget and request court approval. Remember, the trustee requires you to supply proof of purchase within 45 days of approval. If you do not follow through with the purchase once approved, your Chapter 13 payment will be increased to absorb the additional funds in your budget.
QUESTION 2: Can I buy a house while in Chapter 13?
ANSWER: Once you have been in Chapter 13 with consistently current payments for 12 months and you have no delinquent accounts, and a 620 beacon score you may qualify for a VA or FHA home loan. Once you have made your 12th payment, you will need to contact a loan broker and work with him/her. The loan broker will want a copy of your Chapter 13 receipt history. Come by the office and get a copy. After application and approval, secure a copy of a good faith estimate for your loan from your broker and make an appointment to come in with pay stubs for yourself (and your spouse if married) to secure court approval. Any loan application made to the court is permissive. You must get permission to purchase a home.
QUESTION 3: Can I sell my house while in Chapter 13?
ANSWER: You can. You can enter a listing agreement with a real estate agent or work on your own and put your home on the market for sale. Once you receive a contract, you must add to the contract that the sale will be subject to court approval. Once the motion for leave to sell is filed, the court will send notice to all creditors. The court will allow creditors 15 days to object to the sale. If no objections are filed within 15 days, the clerk will note no objections and you will be ready to close. Allow yourself between 30 to 45 days to secure court approval. Once your home has been sold, you need to notify the office so we can assist you with securing your funds from the Chapter 13 trustee. NOTE: YOU WILL NOT RECEIVE MONEY FROM THE SALE AT THE TIME OF THE CLOSING. ALL PROCEEDS WILL BE FORWARDED BY THE CLOSING ATTORNEY TO THE TRUSTEE WHO WILL DISTRIBUTE ANY FUNDS YOU ARE TO RECEIVE TO YOU.
QUESTION 4: Can I borrow money to go to school while I am in a Chapter 13?
ANSWER: You can. You will need to get court approval. Before you make an appointment, gather the following information:
1. The total amount of money you will need to borrow to complete your program of study.
2. What degree will you earn.
3. The date of your expected graduation.
4. The salary range you should expect once you have graduated.
5. When your first payment will be due on the loan.
6. The monthly amount of the payments once your repayment has begun.