Pay-Off Early

[jpdude]

Signed my final papers and fiing this week.

Chap 13, 18K in Secured, 143K in Unsecured

Plan calls for 100% payback of Secured, and about 30% payback of Unsecured.

This works out to 58K payback of 161K

My attorney (a fairly prominent local BK attorney) insisted that anytime during the plan that I can payoff the 58K that I can do so and my BK will be over. I replied "but wouldn't the Trustee simply apply this check over-and-above the 58K payback"? He insisted that they wouldn't.

His argument was that if I write a check and mail to the lockbox BEFORE the annual review by the Trustee, then the Trustee will never review where I got the money, and will only get notice that it is paid in full.

Comments?

[2ndChanceTx]

This doesn't sound right to me. Under the old law you could pay back after 36 months. My understanding is that it is still in question if you will be able to do this under the new law...

[holding on]

Has your lawyer said some of is own clients have done this? More than once. Man this bk stuff makes you shake your head alot.

[jpdude]

Here's the recent Court Case he referred to. Northern Texas, decided in June 2008:

http://www.txnb.uscourts.gov/opinions/pdf/2006-40127-59.pdf

"."

[holding on]

Here is the big 'but' in that case. The trustee actually filed a notice of plan completion. Of course some things mean absolutely NOTHING in bk (e.g. Plan confirmation) and if you argued the meaning of it you would most likely lose. It appears a notic of plan completion means nothing if the trustee is then going to later argue that your plan is not done and your debts shouldn't be discharged.

In addition, the early payoff was due to a house sale. Trustee knew of the house asset. The ruling implies that if the debtor somehow came into a windfall of money some other way , that that case the trustee might indeed win.

[jpdude]

Yeah, it will be up to some interpretations.

In my case, I have the capability of earning annual bonuses (20-40% of my income)...the last 2 years I have earned 0%. We added to the bankruptcy that "the debtor anticipates occasional performance bonuses".

If I happen to get one and use that to pay off the plan, my attorney will argue that it was not unanticipated since it was included in the plan.

?? We'll see if I ever get to that point.