Motion to Incur Debt
The Motion to Incur Debt gives the debtor permission to purchase a home/car/or something else through a loan that will be paid outside of the Chapter 13 Bankruptcy Plan. The debtor still obviously needs to get approved a finance company that is willing to give a loan to someone in a Chapter 13 Bankruptcy.
The motion usually says something along these lines:
THE DEBTOR MAY PURCHASE A VEHICLE FINANCING NO MORE THAN $15,000.00 AND HAVE A MONTHLY PAYMENT NO MORE THAN $400.00
You do not want the motion written up by your attorney to say more than that. Sometimes a lawyer will write an interest rate cap, or the motion will only allow you to purchase a certain vehicle. If the motion says you can only buy a car if the interest rate is 12% or less, and you do not qualify for that low of an interest rate, guess what? You need to get a motion. Guess who gets to charge you more money for doing it again? Your attorney.
Make sure it is done correctly the first time and save yourself some time and money.
How long does it take to obtain the Motion to Incur Debt?
Currently, it takes 24 days + 3 days mailing time. So just under a month. There are exceptions, such as obtaining the order Ex Parte, but that does not happen very often.
Do I pick out my car before or after getting the motion signed?
Dealerships typically turn their inventory over a couple times in a month. They also have no desire to hold onto a car for a month while you get your motion signed by the judge. Additionally, most of the better lenders will not issue you an approval until the motion is signed. It makes no sense to get your heart set on a car that will not be there when you finally get your motion signed. Do not waste the energy. A generic motion is best.
Do I need to provide any documents to the court or my attorney so I can get the motion signed?
Lately, attorneys have been asking for a mock purchase order and contract on a similar vehicle. A four door sedan, a pickup, an suv, etc. We will create a mock contract and purchase order for a vehicle that is within your budget. Just remember to have your attorney NOT put the exact vehicle or interest rate on the Motion to Incur debt.