Sale of Property or Incurring New Debt

(a) Pre-confirmation Motion to Incur New Debt.  With the trustee’s consent, the debtor may, before plan confirmation, seek ex parte approval to incur new debt, or refinance an existing home loan. The debtor’s motion must certify that:

(1) The debtor is current on plan payments and has provided the trustee with current income verification;

(2) The debtor is not in default under the terms of the chapter 13 plan;

(3) Schedules I and J – whether original or amended – were filed within the prior thirty (30) days showing that the debtor has the ability to pay all future plan payments, projected living and business expenses, and the new debt;

(4) The debt is for a reasonable amount; and

(5) Depending on the nature of the loan, that::

(A) Vehicle Loan:

(i) The new debt is a single loan to purchase a motor vehicle that is necessary for the maintenance or support of the debtor or a dependent of the debtor or, if the debtor is self-employed or engaged in business, is necessary for the continuation, preservation, and operation of the debtor’s business; and

(ii) The only security for the new debt will be the motor vehicle.

(B) New Home Loan:

(i) The new debt is a single loan incurred to purchase a residence that is necessary for the maintenance or support of the debtor and debtor’s family;

(ii) The only security for the new debt will be the residence; and

(iii) The monthly payment (the principal and interest payment on account of the new debt plus all impounds, taxes, insurance, association fees, and bonds and other assessments) will not exceed the debtor’s current monthly mortgage or rental payment, or a reasonable amount.

(C) Refinancing an Existing Home Loan:

(i) The new debt is a single loan incurred only to refinance existing debt encumbering the debtor’s residence;

(ii) The only security for the new debt will be the residence;

(iii) All existing liens and security interests encumbering the residence will be paid from the proceeds of the new debt; and

(iv) The monthly payment (the principal and interest payment on account of the new debt plus all impounds, taxes, insurance, association fees, and bonds and other assessments) will not exceed the debtor’s current monthly mortgage payment.

(b) Pre-Confirmation Sale.  With the trustee’s consent, the Court may approve an ex parte motion by the debtor to sell real or personal property with a value of $2,500 or more other than in the ordinary course of business. The debtor’s motion must contain the following certification:

(1) The sale price represents a fair value for the subject property;

(2) All creditors with liens and security interests encumbering the subject property will be paid in full before or simultaneously with the transfer of title or possession to the buyer;

(3) All costs of sale, including escrow fees, title insurance, and broker’s commissions, will be paid in full from the sale proceeds;

(4) The sale price is all cash;

(5) The debtor will not relinquish title to or possession of the property before payment in full of the purchase price;

(6) The sale is an arm’s length transaction; and

(7) “Trading in” a vehicle as part of the purchase price for a new vehicle complies with the requirements of (4) and (5) of this subsection.

(c) Post-Confirmation Sale or Incurring New Debt.  In a confirmed case, in lieu of obtaining a Court order, the debtor may request the trustee’s written consent by providing all of the information required to be included in a Motion as authorized by subsections (a) & (b).

(d) Incurring Other New Debt and Transfers of Debt.  If the trustee does not give consent or if the debtor wishes to incur new debt or transfer property on terms and conditions other than provided for in subsections (a) – (c), the debtor may file a motion, serve it on the trustee and those creditors who are entitled to notice, set the hearing on the Court’s calendar with the notice required by Rule 2002 and LR 9014-1, and file a certificate of service.

Notes 2017:  This Local Rule has been restructured to clarify the information required for the sale of property or incurring of new debt applies in both pre-confirmation ex parte motions by the debtor and post-confirmation requests for written authorization from the trustee.