Effective December 1, 2024, there is a new local procedure and form if a debtor in a chapter 13 case needs to incur debt to buy a car, buy a house, or for other reasons.
Rather than filing a motion or an application to incur debt, the debtor, by counsel, will complete Local Form 4001-3-1, Order Approving Additional Debt in Excess of $5,000, and file the order via ECF as a proposed order.
If the Court is satisfied that the debtor needs to incur the debt and can afford the additional debt, the Court will enter the order forthwith. HOWEVER – the order is not considered a final order (and should not be relied on) until 7 days after the order is entered.
It is a streamlined process but requires the debtor’s attorney to become more involved in counseling the debtor and in showing the Court that the additional debt is needed, and that the debtor can afford the debt.
Click here to get a Word form for your use. Just tab to each gray text field and type in the information requested. Type as much as you want. If you need to, you can unprotect the form by going to the Review tab, clicking on “Restrict Editing,” then clicking on “Stop Protection.”
The questions/statements on the form are intended to elicit from the debtor information to help the Court understand why the debtor needs to go into debt, and how they can afford to pay it back without affecting their ability to make plan payments.
