Early payoff question

[hardluckwmn]

My plan is under the old law. We're 36 months into a 60 month plan. My plan payment (60%) includes my mortgage. If we pay off early will that amount still go to the mortgage, or would they split it between our creditors since we would resume normal monthly payments on the mortgage once discharged? We want to sell the house and if all of that money went to creditors instead of the mortgage it makes no sense to pay off early. Anyone have any ideas on this?

[TiredandWeary]

My plan is under the old law. We're 36 months into a 60 month plan. My plan payment (60%) includes my mortgage. If we pay off early will that amount still go to the mortgage, or would they split it between our creditors since we would resume normal monthly payments on the mortgage once discharged? We want to sell the house and if all of that money went to creditors instead of the mortgage it makes no sense to pay off early. Anyone have any ideas on this?

I am a little confused by your question. I am in a Chap. 13 plan, however, it was filed after the new laws, so maybe my interpretation of things is completely different than someone who has been in the plan before the new laws went into effect, such as yourself. The way I understand things is that if you wish to get out of your plan early (before 60 mos. in a 60 month plan), you must first pay back 100% of the original debts to all creditors. Assuming that there is enough equity in your home if you were to sell it, then it is my understanding that you would have to pay back 100% of the original debt with the proceeds from the sale of your home. Any equity left over would be yours to keep. You can only do this if you have been in the plan a minimum of 36 months, if I am not mistaken. So, it appears to me that the only benefit of paying off everything early would be that you get to be out from underneath the "thumb" and microscope of your trustee once and for all. Also, don't forget that you would also be free to keep all future tax refunds, as well, once you exit the plan early! You would be free to live your life as you please once again (let's hope you never end up back in BK )...that would be beneficial in my opinion!

[hardluckwmn]

In an earlier (different) question, someone indicated that because we filed under the old laws and are now past the 36 month mark we would only have to pay the plan base (60%) if we decided to pay off early. My question is this: $1100 of our monthly payment of $1500 is for our mortgage. We have 23 months remaining in our plan. This means of that amount approximately $25,000 is set to go toward the mortgage. When our plan ends we will take the payments back over on our own for the mortgage (if we don't sell our home first). If we paid off our plan early would that amount still go to the mortgage and essentially prepay it? Could we count on that reducing the payoff amount of our mortgage?

[MOMof3]

My understanding is that only items that were a "claim", like mortgage arrears, would be considered in a payoff total, not the regular on-going payments. I would check with your lawyer, but I think the payoff would NOT include future mortgage payments.