Chp 13 Payoff Question

[kmb]

I was just looking at my Chp 13 paperwork a little closer than I did a year ago when I filed.

There is language in Section D "Payments by debtor to the trustee; plan and term completion" and the box next to this statement is checked: "The plan will conclude before the end of the initial term at any time that the debtor pays to the trustee the full amounts specified in Paragraphs 1 and 2."

Paragraph one has my total amount due during the term (which is 26% of all unsecured debt) and paragraph 2 isn't relevant to my case. (talks about not paying enough into the plan for the unsecureds).

I've been under the impression all along from everything I've read on this board and others that unless you pay back 100%, you cannot get discharged from a Chp 13 early, but the statement above seems to contradict this. So does this mean that once we pay the amount listed in the plan term, we can be discharged? I know my laywer did mention we could get out early, but again, after everything I've read that we can't, I just chalked the statement up to his not knowing the facts. However, if this is truly the case, I'm going to start scrimping even more to try and do just this.

TIA!

[woeisme]

The previous BK law allowed early payoff after the 36 month mark. No one has reached the 36 month mark in a CH 13 since they changed the laws since the change was in Oct of 2005 I believe. It is quite possible that early payoff will be allowed without requiring 100% pay-back, but my understanding is that no one knows for sure how the trustees will treat this until cases start actually showing up past the 36 month mark post-new law. Sure does sound like the way your paperwork words it that you will be allowed to pay out early though. If I were you, I'd start that scrimping, but don't send the $ in as payments, keep it in your safe or savings account or where-ever, then wait until the end of the year to get a more definitive answer on your question once people start hitting the 36 month mark under the new law.

[kmb]

There is also no mention of a minimum amount of time (like 36 months) in the paperwork either. I'm assuming this is written somewhere in the federal laws, but my paperwork doesn't say anything about a required 36 month plan. I honestly don't know how the trustee can dispute an early payoff if in the documentation that they approved, it says it is allowable.

[Flamingo]

kmb...call your attorney and ask and let us know. I am old law, early buy out. As woeisme stated, under the old law, after 36 months if you were able to buy out of your Plan (i.e., lots of house equity to refinance), you could do so after 36 months at the percentage of your confirmed plan and could buy out at the balance owed on your Plan at that time. Prior to 36 months if you wanted to buy out you bought out at 100%. Since the 36 month term is approach for many of those filing in October of 2005 under the new law, postings should start soon on this subject with experience. But if you can find out something from your attorney, it would benefit you and also benefit those on here with the same questions.

[CH33 Paralegal]

Anything under 70% has a 36 month ACP. If you're 70% or above, you can usually pay out early.

[Flamingo]

Anything under 70% has a 36 month ACP. If you're 70% or above, you can usually pay out early.

Is that still applicable under the new law?

[CH33 Paralegal]

that is the new law

[NowImDownInIt]

What's an ACP?

[Flamingo]

that is the new law

Excellent - many posters have been waiting for that information....!

[Flamingo]

What's an ACP?

I believe she/he is referring to the "Applicable Commitment Period" of a Plan.

[kmb]

CH33 Paralegal---based on what you are saying, I must remain in Chp 13 for a total of 36 months (since I'm at 26% payback) and than after that, I can buy-out the rest? I just mailed the payment for month 14, so if I play my cards right, I can be done in less that 2 years?

That would be sweet

[Flamingo]

CH33 Paralegal---based on what you are saying, I must remain in Chp 13 for a total of 36 months (since I'm at 26% payback) and than after that, I can buy-out the rest? I just mailed the payment for month 14, so if I play my cards right, I can be done in less that 2 years?

That would be sweet

You just can't "buy out." It takes Trustee approval and you will need to show the source of the income as to the money to buy out of your Plan (i.e., equity in house to refinance to buy out). There are other factors also involved so it's best to consult with your attorney at the right time. And it's not an overnight process; took us several months from start to finish.

[CH33 Paralegal]

ACP stands for the Applicable Commitment Period.

[laurannm]

You just can't "buy out." It takes Trustee approval and you will need to show the source of the income as to the money to buy out of your Plan (i.e., equity in house to refinance to buy out). There are other factors also involved so it's best to consult with your attorney at the right time. And it's not an overnight process; took us several months from start to finish.

What if a relative offered to give you money (such as a gift or loan) for buyout? Would that be allowable?

[funspot08]

What if a relative offered to give you money (such as a gift or loan) for buyout? Would that be allowable?

As far as I know, you could payoff a case if it's 100% under the three years, however, not if it was loan. Whether the money is or isn't, that's something be left unsaid. You could state that I received the money as a gift from a relative to pay off the plan. The trustee can't object to a gift amount that covers the entire owed amount. He/she is taking care of their responsibility of getting the creditors the money.