Can I Borrow Money When I Am In Bankruptcy?

Can I Borrow Money When I Am In Bankruptcy?
When you are in bankruptcy you need the Bankruptcy Court’s permission to borrow money. The most typical context in which you borrow when you are in bankruptcy is the purchase of a vehicle. This is treated differently depending on whether your bankruptcy is a Chapter 7 or a Chapter 13. For an explanation of Chapter 7 and Chapter 13 see my article entitled, “The Difference Between Chapter 7 and Chapter 13, and Which One Is Right For You.”
Chapter 7 is such a short process that you usually do not need to borrow while you are in bankruptcy. And particularly in the context of a vehicle purchase an automobile creditor usually will not work with you in a Chapter 7 until you have received your discharge. See my article entitled, “When is the Best Time to Buy a Car When I am in Bankruptcy.”
When you are in a Chapter 13 bankruptcy and you need to purchase a vehicle, you go to the car dealer and get a document from them known as a “good faith estimate.” This good faith estimate, along with an explanation as to the source of the funds for the down payment, is provided to the Trustee appointed by the Court to administer your bankruptcy case. If the Trustee agrees the purchase of this vehicle is reasonable, they will sign a document known as a “stipulation” which says they agree to the Court entering an Order allowing you to purchase the vehicle. If the Trustee does not agree to sign the stipulation, a motion can be filed to the Court asking your Judge to enter an Order allowing you to purchase the vehicle. Once the Judge has signed the Order, you can take the Order to the car dealer and complete the purchase.
The above information is a general overview and is not intended to be used as legal advice. If you are considering filing for bankruptcy, the best thing to do is call our office at 248-557-3645 and schedule a free consultation so you can receive advice which is tailored to your specific circumstances.

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