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Can I Incur New Debt, Like a Car Loan or Credit Card, While in a Chapter 13 Bankruptcy

In general, no you cannot. Your income during a chapter 13 plan is considered an asset of your bankrupt "estate," as it is most often the source of your payments and what makes your plan feasible.

When you incur new debt, you are usually decreasing your monthly "disposable income" that is used for your payment, thus running the risk of making your plan no longer feasible. Therefore, doing something like getting a new credit card is generally a really bad idea!

But There Is an Exception

One exception to this is if you need to purchase/lease a car or make some emergency home repairs. In those cases, you would need to get the court's permission first through a motion. If you are in a chapter 13 in Southern New Jersey (Camden, Gloucester, Salem, Cumberland, Atlantic, and Cape May Counties, and the southern part of Burlington County) and need to buy or lease a car, if you meet certain crieria, you may obtain a "no position" letter from the trustee. Get the details here.

In any case, if you find you need to incur new debt, you should contact your attorney first. No matter how necessary you may think it is, the incurring of new debt could have a serious effect on your plan. It may also not actually benecessary.

Haven't Filed Yet?

If you live in southern New Jersey and are considering filing bankruptcy but have not filed yet, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.

If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.

Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.