Local Rule 4001-5: OBTAINING CREDIT

RULE 4001-5. OBTAINING CREDIT.

(a) Generally. A debtor seeking to obtain credit must follow the procedure set forth in Local Rule 4001-4 except as set forth below.

(b) Chapter 12 or 13 Trustee Approval Process.

(1) Once their plan is confirmed, a chapter 12 or 13 debtor may obtain credit with trustee approval if the debtor seeks to:

(A) borrow no more than $18,000 to purchase, or spend no more than $300 per month to lease, a motor vehicle;

(B) borrow or spend no more than $7,000 for an extraordinary expense that is (i) reasonable and (ii) necessary to maintain the health and general welfare of the debtor and/or the debtor's dependents; or

(C) borrow no more than $20,000 to purchase farm equipment in a chapter 12 case.

(2) The debtor shall seek trustee approval using the trustee's loan approval request form (see Local Form Y-3) signed by the debtor and the debtor's attorney (if any). If a chapter 12 debtor seeks trustee approval under this Rule to purchase farm equipment, the loan approval request form must also be signed by all secured creditors whose interests will be affected by the borrowing.

(3) If the trustee determines the request will not require a material modification of the debtor's budget and is in the best interest of the debtor and the bankruptcy estate, the debtor may obtain the credit upon the trustee's filing of an approved request form that comports with the signature requirements set forth in subparagraph (b)(2) above.

(4) The debtor is not required to serve notice of the request on any other parties or obtain an order of the Court if using this process and seeking to borrow or spend no more than authorized under this Rule.

(c) Court Approval Process.

(1) Once their plan is confirmed, a chapter 12 or 13 debtor may obtain credit with Court approval if the debtor seeks to:

(A) borrow more than $18,000 to purchase, or spend more than $300 per month to lease, a motor vehicle;

(B) borrow or spend more than $7,000 for an extraordinary expense that is (i) reasonable and (ii) necessary to maintain the health and general welfare of the debtor and/or the debtor's dependents;

(C) borrow more than $20,000 to purchase farm equipment in a chapter 12 case; or

(D) any circumstance described in subparagraph (b)(1) above, including when the debtor previously sought trustee approval and the trustee denied the debtor's request.

(2) The debtor shall seek Court approval by filing a motion that sets forth the amount requested and the nature of the expenditure, and a budget showing the debtor can afford the monthly payments on the loan, as well as:

(A) for a motion to borrow or spend funds for a motor vehicle:

(i) a description of the motor vehicle, including the make, model, year, and VIN;

(ii) the motor vehicle's purchase/lease price and the name of the seller/lessor;

(iii) the proposed lender of the funds and the financing terms; and

(iv) a description of how the debtor proposes to make any down payment on the purchase/lease of the motor vehicle;

(B) for a motion to borrow or spend funds for an extraordinary expense, an explanation of why the debtor believes the expenditure is both reasonable and necessary for the health and general welfare of the debtor and/or the debtor's dependents; and

(C) for a motion where the debtor previously sought trustee approval but the trustee denied the debtor's request, a copy of the trustee's denial.

(3) The debtor shall serve notice of the motion on the trustee and all creditors.