Paying more than required monthly payment?

[kcsmom76]

Dh and I have payed 40 months on a 57 or so month plan. The reason I don't know how many we have left is because we have some secured items in our Chapter 13 and interest has accrued.

Anyway, we want out of this thing by the end of the year. We are planning on eating beans and taters to save money to put towards extra on the 13. They already take any extra we might have so we are tightening our belts.

If we send in extra money a month, will they try and make us pay back the whole amount?

BTW, we filed under the old law.

TIA.

[MomIcantFindmy]

If you send extra and are on 100% payback then you will pay off early. If you are anything less than 100% you will just be giving them more. Why not put it into savings and then just pull each months payment out for the entire 57 months. That way at the end you have a little nest egg.

[chpxiii]

I agree with MomICantFindMy. If you want out early, call and see if you can just pay the remainder off. If you can, find out what it is and see if you can swing it. Like MomICantFindMy said, if you're at anything less than 100%, you'll just be giving your creditors extra money and you won't be helping to shorten the 13. Best to just pay all the rest off if you can.

[kcsmom76]

OK, I'm glad I asked. I thought after 36 months were up we could just pay extra and we wouldn't have to pay the full 100%. We are only paying 20% and that is more than enough.

[coma]

Under the old law, you could pay off at 36 months and pay the plan amount only, not 100% (at least where we filed...I don't know if that was a district thing).

however, if you start paying extra monthly, and all of you disposable income is already supposed to be paid into the trustee, they may wonder where the extra monys is coming from.

[chpxiii]

Right, coma.

kcsmom76, if you filed old law and have already paid atleast 36 months into the plan, call your lawyer and tell them you want to do a pay off. But you have to have the money in order to pay off the rest of the money that is in your plan amount. Also be prepared to tell them where the money came from.

My attorney asked me where I got the money. I asked her why she wanted to know and she said because the trustee may want to know where the extra money is coming from. I simply told her "savings."

A few times over the years I sent in an extra payment - only like 3 extra payments. It DID NOT SHORTEN my chapter 13. It's amusing to try to explain it to my boyfriend and it wasn't until I said, "Payment on debt in a chapter 13 when it's not 100% payback is not like paying off traditional debt with a creditor when you make extra payments." Then he got it. This is not like a traditional debt payoff.

If you can't pay off the rest of the amount in your plan amount, don't bother sending in extra payments. Just continue to make your monthly payment (since you are not in a 100% pay back plan) and the "extra" payment you want to make, put it in savings.

You never know, the extra payments you have in savings you may one day find it can help to pay off your chapter 13 early. I did it that way and paid off my chapter 13 9 months early. (I filed old law)

[kcsmom76]

Thank you so much for clarifying that Chpxii. I thought we could just put extra toward it each month and pay if off sooner. We can but only with the actual payoff amount.

Thank you, thank you, thank you. I am so hard-headed it wasn't sinking in.

BTW, we got a payoff amount a few months ago and it is wayyy more than we could payoff at this time.

[chpxiii]

BTW, we got a payoff amount a few months ago and it is wayyy more than we could payoff at this time.

LOL! I know that!

About a year or two ago, sometime after the 36 months, my BF was encouraging me to pay off. It was like, $13k or something. EEPS! No way could I have paid that off!

Now's a good time to start up a savings since it seems you have a few bucks extra a month. I know that even though I paid a few times extra, I didn't want to do that because I did not want the trustee to know I had more disposable income and therefore upping my payment. I was at 0% for unsecureds. Essentially, I just wanted to stay out of his radar range. But once I could pay it off, I did so. And it was a reasonable amount that had I saved over the last 4 years, it was feasible that I could have saved that amount so it wasn't any huge large amount that would set off red flags to the trustee.

Now, I'm obsessed with savings. Especially since I'm making more money. And most especially since I have NO retirement AND I want to buy a house.