In Chapter 13 bankruptcy, the debtor proposes a repayment plan to the court to pay off their debts over a three to five-year period. During this time, certain major financial decisions may require court approval to ensure that they align with the terms of the bankruptcy plan and do not negatively impact creditors or the debtor’s ability to fulfill their repayment obligations. Some examples of major financial decisions that may require court approval in Chapter 13 bankruptcy include:

  1. Refinancing or Obtaining New Credit: Any attempt to refinance a mortgage or obtain new credit while in Chapter 13 will likely require court approval. This is because it could affect the debtor’s ability to make plan payments and may involve adjusting the repayment plan.
  2. Selling Real Estate or Other Assets: If the debtor wants to sell real estate or other significant assets during the bankruptcy, they may need to seek court approval. The court will want to ensure that the sale is reasonable and that the proceeds are appropriately used, such as to fund the repayment plan.
  3. Major Purchases: Making significant purchases, such as a car or expensive property, may need court approval, as it could impact the debtor’s ability to fulfill their repayment plan.
  4. Changes to Employment or Income: If there are significant changes to the debtor’s employment or income during the bankruptcy, the court may need to approve these changes as they could affect the debtor’s ability to make plan payments.
  5. Relocation: Moving to a different state or location may require court approval, as it could impact the bankruptcy proceedings, jurisdiction, and other legal considerations.
  6. Large Expenditures or Windfalls: Receiving a large sum of money, such as an inheritance or lottery winnings, or making substantial expenditures may need court approval, as it could influence the repayment plan.
  7. Modifications to the Repayment Plan: If the debtor encounters financial difficulties during the bankruptcy and needs to modify the repayment plan, they would typically require court approval for any changes.

It’s important to remember that the specific requirements for court approval can vary depending on the jurisdiction and the unique circumstances of the bankruptcy case. Debtors should consult with their bankruptcy attorney to understand the rules and procedures for obtaining court approval for any major financial decisions while in Chapter 13 bankruptcy. The attorney can help ensure compliance with the bankruptcy laws and advocate for the debtor’s best interests.