Can you pay ch.13 off early?

[Wizardree23]

Does anyone know if you can pay the sum of your chapter 13 off earlier then the 3-5 years?

[lrprn]

The answer is....yes, maybe, and no. It all depends on what state and bankruptcy district you filed in and what the accepted local trustee practices are around early Ch 13 buyouts.

Some trustees will allow you to pay off any time after filing if you can pay all your creditors back 100% of what they are owed. Some won't allow you to pay off until after a certain number of plan years have been successfully completed (like after 3 years of a 5 year plan). Some will expect 100% payback of creditors, others keep the payback % what is indicated in your plan.

Another hitch - don't make the assumption that the payoff will be at the listed total remaining to be paid out on your plan. It might be, it might not be. There was a recent ruling in Missouri that seems to indicate that any early payoff before the end of plans any time during the plan must repay all creditors 100% of what is owed them.

Last hitch - if you get an unexpected windfall while you are in your plan (win the lottery, get an inheritance, etc) and would like to use it to pay off your plan early, you must report the windfall to your trustee first. Some trustees will apply it to your plan and reduce your total number of payments accordingly; others will use your windfall to pay back a higher percentage to your creditors and leave the number of plan payments the same.

Bottom line - ask your bankruptcy lawyer what the local early Ch 13 payoff practices are in your area. If you don't have a lawyer, make an appointment with one who gives a free initial consultation. Good luck - keep us posted about what you find out.

[Anj]

it's all about the % you are paying back. I am 100% - so I am in this for the whole amount. I can refinance out at any time - because it's got to be paid today or in 60 months... whichever.

We are waiting for 8-12 months to get our equity a little higher and our 13 a little lower and then we will refinance out.

GL!!

PS - Irprn - we filed on 1/10 - and we are still not confirmed... so - 6 months into the plan and we still keep chugging along...

[aa06a47]

Wow Anj...your a 100% plan and after 6 months your still not confirmed. What gives? I would be talking to my attorney or trustee and ask what the hold up is.

[aa06a47]

Does anyone know if you can pay the sum of your chapter 13 off earlier then the 3-5 years?

Under the old law, after 3 years definatly the answer is yes.


The new law changed the wording somewhat to "all disposible income during the applicaple committment period". The old law only worried about all disposible income the first 3 years.

Under the new law, lrprn nailed it on the head. I think the only safe answer is not unless you intend to pay back 100% and definatly not before 3 years unless you pay back 100%.

The ruling in Missouri applied to rejection of a proposed chapter 13 plan that did not use all disposible income during the committment period with a small % payback to unsecured creditors. According to my attorney, that it does not mean the same in a confirmed plan with all disposible income being included in the plan. She still contends you can pay after 3 years the POT as long as the POT includes all disposible income.

I think when the new law turns 3 years old, we will see some court cases pop up concerning this very thing.