Can I pay my Chp 13 off faster?

[KeepHopeAlive]

I have read some of the other posts that I think may have alluded to this, so I apologize if this question sounds redundant. Being a "newbie" to the forum, I want to make sure my understanding is perfectly clear:

1. Once my Chp 13 plan is approved, if I make more more money, increase sales, have a windfall, etc. can I pay off my plan faster?

2. Or will they just take my extra earnings/profits and say "thank you very much, now instead of you paying your creditors 50%, you can afford to pay them 70%"

If #2 is the case, that sounds like it would discourage people from trying to improve their financial situation...

[SinkingFast]

And the answer is,............... #2!!

Bingo! You got it!

Any pay increases, not cost of living type, more like 10% or more, have to be reported and the plan payments increase.

If you win the lottery, or get an inheritance while you're in a Ch 13 plan, the windfall goes right to the plan.

The only way you could buy out early is if you're structured into a 100% repayment plan to begin with. Or if you have a huge windfall that will pay your plan at the 100% pay back level.

[Minnymouth]

Sinking Fast is CORRECT......... any and all extra income you may receive (other than cost of living) will be applied to your Chapter 13 plan.... Does not mean you pay them off quicker, means you will just pay them more in the plan...

Sorry but that's the way it works..... also that is one reason why a lot of Chapter 13 plans fail.... Seems like you can't get ahead at all because every extra dime goes into the plan... so for 3-5 years you never have any real excess monies.

[Jman30]

Well, you can pay it off faster a couple of ways, if you wanted:

1) You can send an "extra" Chapter 13 payment, if you have a chance. For instance, I saved every penny and in December of last year, my chapter 13 payment was taken out of my paycheck and I sent a money order for an additional playment. This additional payment reduces the amount of the amortization of the plan.

2) You can always request a payoff letter and payoff your Chapter 13 whenever you want. For example, if you win the Powerball drawing tonight and win 300 million dollars, you can pay off your Chapter 13. However, if you pay it off before month 36, you will pay back 100% of the debt. If you do it after month 36, you only pay the percentage of your plan.

[therock48881]

yes

technically you are supposed to pay in all of your disposable income during the first 36 months of the 13. so, if you can make extra payments during that time period, that money will just go to your creditors and you will still be in the plan the same length of time. however, not all cases are 36 month cases. if you are in a five year plan, after the 36th month you can apply extra to it and it will shorten your plan. we were in a 5 year plan and decided to refi our house to pay off the 13. our attorney advised us to wait 2 more months until the 36th month had passed. if we had done it in the 34th month, we would have had to pay the creditors at 100%. by waiting until the 36 month, we only had to pay 33% to the creditors. waiting two months literally saved us thousands of dollars. by the way, if anyone needs to know a great lender with decent rates who is used to refinancing houses to get people out of a 13, drop me an email and i will give you his name and number. our rate for a 30 year fixed came in at 8 percent and we were able to pay off the 13.