Q: I’m currently in chapter 13, my husband and I tried to get a car through our bankruptcy and got denied. HELP!

A: The answer to this question could vary depending on what bankruptcy district your case is pending in. I practice in the Southern District of Alabama, which has a very reasonable and workable approach to getting Debtors in a position to replace or purchase a vehicle while in Chapter 13. The process involves the Attorney for the Debtor filing an application with the Court for the legal authority to borrow funds ( currently at time of this post the Court will generally approve an auto loan up to $18,000.00 with a maximum loan payment of $450.00 per month). The Debtor is required to obtain Court approval before moving forward with a loan or borrowing any funds usually over $500.00, because the Debtor's future income and earnings are under the Bankruptcy Court's jurisdiction. If you have a bankruptcy lawyer for your case, and hopefully you do, make sure you reach out to your attorney and ask about his or her filing a motion for authority to borrow funds to purchase the vehicle. In our district, the Court will issue an Order with the terms requested up to a max loan of $18,000 and max payment of $450.00 per month, and the Debtor can take a copy of this Order to their bank, credit union or finance company to get pre-approval for the loan before searching for a vehicle.

A: You need to obtain approval from the Court to incur new debt prior to doing so, but the Court will generally allow you to do so, especially in instances where your current vehicle is sbout to die.