Can you borrow money while still under chapter 13? 13 Answers as of February 06, 2014

Have one year left under our Chapter 13 and I want to borrow $1000 from our 401K, which we intend to repay in 2 months, as coming up short to pay taxes and car repairs. How would trustee find out if not reported must a 'motion to incur debt' really be filed for such a small amount and time?

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David R. Fondren, Attorney at Law
David R. Fondren, Attorney at Law | David R. Fondren
As far as I am aware there is no dollar amount required before a motion is necessary. They still want to know how you are going to pay this back, how you manage to get these extra funds over the next couple of months or if the old creditors will suffer because of this. I am aware that people borrow small amounts from friends and relatives without a motion, but these usually do not involve a written contract and a strict payment plan. Check with your attorney.
Answer Applies to: Missouri
Replied: 2/6/2014
OlsenDaines, PC
OlsenDaines, PC | Kristoffer Sperry
The bankruptcy code requires permission be granted to obtain a loan while in bankruptcy. If you did take the loan it will likely show up on your paystubs or taxes and the trustee could file a motion to dismiss your case if their office didn't know about it. It seems you have legitimate needs and the court may likely allow the loan.
Answer Applies to: Idaho
Replied: 1/2/2014
Albertazzi Law Firm | Anthony Albertazzi
Yes, you can. However, you need to get permission from your trustee. Contact your attorney to discuss this. Do not borrow the money until you get the approval. Oregon bankruptcy trustees have very good websites with information about this.
Answer Applies to: Oregon
Replied: 12/30/2013
A Fresh Start
A Fresh Start | Dorothy G Bunce
How would "someone find out" is a question that makes any ethical attorney cringe! If you agreed not to borrow money without court approval, whether someone finds out is not the point. The entire point of being in a Chapter 13 is to obtain a discharge by complying with a court order. You can dance on the edge of a cliff if you like, but when you do get caught, the consequences could be enormous.
Answer Applies to: Nevada
Replied: 12/30/2013
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Yes, you must file the motion or risk sanctions from the court. Judges get "a little upset" when people disregard their orders.
Answer Applies to: California
Replied: 12/30/2013
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    Depends on your confirmation order regarding the incurrence of a debt. The Trustee would find out because you are a law abiding citizen and would tell him voluntarily if required by the order to do so.
    Answer Applies to: Michigan
    Replied: 12/27/2013
    Elkington Law
    Elkington Law | Sally Elkington
    You need to call or have your lawyer call your trustee's office and find out whether you need to file a motion, or whether she will approve by a stipulation. Don't do anything to put your bankruptcy at risk.
    Answer Applies to: California
    Replied: 12/27/2013
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