Pay off creditors before BK13 discharge

[larry13]

I am about 42 months into a 5 year 100% ch13 plan. I've been working for about 5 years and making good money. The balance is down to the point where I could pay 40-50 cents on the dollar on the remaining balance. I would have to file for BK dismissal and then open negotiations with the creditors. Does anybody have any experience with this approach? I'm worried that the creditors won't be willing to settle, since I've demonstrated my ability to stick to the plan.

[justbroke]

Personally, I would not do this. You are not guaranteed that the creditors will play ball. It opens you up to tax liabilities on any forgiven debt.

There's nothing else to say really.

[corrin69]

What do you owe on the plan?

[HHM]

Dumb idea, stay with the plan, the benefits outweigh any "perceived" benefit of getting out early.

One thing to consider...when you dismiss your chapter 13, creditors get to go back to the date of "filing" and add back interest and fees. That, combined with possible tax consequences and the uncertainty make it a dumb stupid idea, period.

[larry13]

Thanks everybody for your thoughts!

Wow, this place is great! I wasn't sure I'd get any response. HHM, you really hit the nail on the head! I wasn't aware of the back interest and fees. I was prepared for the tax impact, because I would still come out ahead.

Corrin69, the balance is about $18k, and I'll be finished by August 2012.

Thanks, again, for your inputs.

[jetsfan2010]

was it a 100 percent payback plan?

[justbroke]

was it a 100 percent payback plan?

larry13 indicated, above, that it was a 100% payback plan. This is probably due to the number of claims filed and larry13's disposable monthly income (DMI). Even with that, the problem is really that the home is severely underwater (unless it's worth $900K on a $1,000,000 mortgage balance).

[larry13]

Thanks again to all of you who contributed. No home, actually.

[justbroke]

For some reason, I was using information from a different thread (and different person). So, don't mind what I wrote about the home above.