Chapter 13 early pay off

[PI_Lvr]

I contacted my Trustee's office directly and they sent me a payoff quote. I was so scared to call them but they were easier to talk to than my lawyer, and very helpful. My payoff quote basically looked like this:
$81,084.00 Principal Owed (to all claims)
$8,668.00 Trustee Fee
$1,916.00 Interest (not yet paid) Owed on Secured Loans
$91,668.00 Total payback at 100%

Understand that my initial filing was for only $86,684.01. My trustee's office said that they're fee is 10% of the initial claim. My payback was 2 secured loans at 100% and then 15 unsecured loans at 3%. My 100% total payback goes down each month by the exact amount of my payment, so I can just figure it out from the date of the last payoff quote, minus how many payments I've made, just how much my 100% payoff is.

Now I just need to sell the house with enough profit to cover it all.

John
Virginia

[aa06a47]

I contacted my Trustee's office directly and they sent me a payoff quote. I was so scared to call them but they were easier to talk to than my lawyer, and very helpful. My payoff quote basically looked like this:
$81,084.00 Principal Owed (to all claims)
$8,668.00 Trustee Fee
$1,916.00 Interest (not yet paid) Owed on Secured Loans
$91,668.00 Total payback at 100%

Understand that my initial filing was for only $86,684.01. My trustee's office said that they're fee is 10% of the initial claim. My payback was 2 secured loans at 100% and then 15 unsecured loans at 3%. My 100% total payback goes down each month by the exact amount of my payment, so I can just figure it out from the date of the last payoff quote, minus how many payments I've made, just how much my 100% payoff is.

Now I just need to sell the house with enough profit to cover it all.

John
Virginia

Yes, I understand when your in a 100% payback Chapter 13, not many are though. What we are talking about here is people who have a 2%-30% payback and are getting mixed signals on ability to payback early.

For example, if when you filed the chapter 13, your pot plan came to a total of $25,000 (however, you had over 100K owed to creditors). If after 3 years of making payments, you have 10K left to pay on the pot. Here is where the problem comes to:

Can you get a 10K loan and pay off the pot early? Or... since you owed 100K to creditors, and your plan only was paying back 25K, to get out of jail early, would you need to come up with the entire 100K?

Seems different courts, different trustee's have different rules.

[bobby125]

aa, this is exactly the question we need the answer to.

i owe $100k total, I am paying back $743 for 54 months or $40,122.

if 12, 24, 36 months in, i want to pay off early, can I?

does the 36 month point really matter? (hearing after 36 months, you can, b4 you cant, etc.)

as you referenced, once you get started, you might as well sit tight the whole way through.

i have a mortgage on a rental home that is "up" (fixed for 1st 5) after 3 years, I thought i could sell then and pay off balance, but now I dont know. maybe when that 3 years is up, i should go month to month high ass interest for last year and a half of plan to just be sure

cannot believe their is not an answer to this question!

[anonymuse]

I have no answers, but if we're keeping the conversation down to low plans (ex 2-30% payoff), from what I've read, it seems like debtors are treated differently based on where the money is coming from. It seems different based on raises, inheritance, big bonus, selling house due to job movement, and refinancing your house.

It just doesn't make any sense to me that it would make any difference at all (except maybe if you won $150,000,000 in the lottery).

[anonymuse]

Yes, I understand when your in a 100% payback Chapter 13, not many are though. What we are talking about here is people who have a 2%-30% payback and are getting mixed signals on ability to payback early.

For example, if when you filed the chapter 13, your pot plan came to a total of $25,000 (however, you had over 100K owed to creditors). If after 3 years of making payments, you have 10K left to pay on the pot. Here is where the problem comes to:

Can you get a 10K loan and pay off the pot early? Or... since you owed 100K to creditors, and your plan only was paying back 25K, to get out of jail early, would you need to come up with the entire 100K?

Seems different courts, different trustee's have different rules.

I had to read his post twice. He's 100% on secured (I'm assuming he was behind on the secured loans when he filed bk), but only 3% on 15 unsecured loans. They did not raise the percentage on the unsecured loans.

[nervousSC]

I'm somewhere between 1% & 2% payback. My attorney also said that if I want to I could pay more every month than was required, she said for a 3 year I would be paying $200/month, but if I want to I could change it to a 5 year plan paying 120/month.....AND THEN pay 160 per month, paying off early at 45 months.........hmmmmmmm......I'm confused and could really use clarification. I'm not filing until 6/16 so I don't have a trustee to call........

[aa06a47]

I'm somewhere between 1% & 2% payback. My attorney also said that if I want to I could pay more every month than was required, she said for a 3 year I would be paying $200/month, but if I want to I could change it to a 5 year plan paying 120/month.....AND THEN pay 160 per month, paying off early at 45 months.........hmmmmmmm......I'm confused and could really use clarification. I'm not filing until 6/16 so I don't have a trustee to call........

WOW...that seems dangerous. If you actually pay more per month into the plan, it seems to me the trustee would be a little suspucious that you were actually projecting all your disposable income into the plan in the first place. I wouldn't go there.

[SinkingFast]

I'm somewhere between 1% & 2% payback. My attorney also said that if I want to I could pay more every month than was required, she said for a 3 year I would be paying $200/month, but if I want to I could change it to a 5 year plan paying 120/month.....AND THEN pay 160 per month, paying off early at 45 months.........hmmmmmmm......I'm confused and could really use clarification. I'm not filing until 6/16 so I don't have a trustee to call........

Unless you simply cannot swing it, I would go with the higher $200/mo for 3 years. Get that plan over and done with and get that Trustee outa your life! Don't give him/her 2 extra years to mess with you if you can afford not to.

It doesn't make any sense that a Trustee would let you buy out early when you're only paying back 5%-10% of what you actually owe.

All thruout the plan, the Trustee takes income tax refunds and payments don't change. The tax refund money is just extra money for the Trustee and Creditors.

You get an inheritance, unless it's huge enough to pay off all you owe, the Trustee takes the inheritance and your payments don't change. Sadly, BK Biker just experienced that situation.

Maybe different Trustees handle it differently. Maybe some figure once you've been in the plan for a while, you've learned your lesson and your credit is scarred for a while with the stigma of BK showing.

[PI_Lvr]

Actually, Anonymuse, we were not behind, the secured were a lien on the house for trim and a leased vehicle. Since I DID NOT include my mortgages in the BK13 I had to go 100% for anything secured.

What I was trying to get through is that, at least in Virginia, if you pay off BEFORE the 36 month mark you must pay EVERYTHING 100%. I owed $86k at filing, and even after paying over $700 a month for 16 months, at 100% payback, I will still owe over $90k due to fees and interests.

I can't emphasize more about not being scared to talk to your Trustee. They have really been helpful to me when I started this quest to pay off early.

[Pumpkin729]

Thanks PI Lvr., so the trustee accepts the 3% for the unsecured? I have heard 2 sides, if you pay early, you pay it all, and then my lawyer said, once the POT is set, that is all you have to pay. You have some good reasons to "move on". Good post.

aa06a47...what state are you in???

[aa06a47]

aa06a47...what state are you in???

My lawer told me today that I could pay off early (as long as it was after 3 years, if I tried to pay it off before 3 years, I would pay 100%). She encouraged me to make higher than actual payments to get it paid off early. She said, any months you have extra left over, pay it to the trustee, it will get you done sooner. I asked her about the 60 month rule, she said, after 3 years your still allowed to pay the pot off and be done with it.

I really feel there might be a creditor challenge to this down the road. Under the new law, all disposible for 60 months is to be paid in the plan. The old law was all disposible for 36 months. Plans longer than 36 months did not require "all disposible" income after the 36 months. I just think an early pay off could be challenged as the creditors would be giving up "future payment increases"...but the way the economy is going, it might be better for them instead of payment decreases? Who knows.

Time will tell, 3 years from now I will start investigating it more.

[nervousSC]

That's exactly what I was told AA! I hope it's true!

[anonymuse]

Does the 36 month early payoff only apply if you are under the median income?

[Jman30]

This is a great thread, I have been cotemplating this issue for months.

I am 17 months into a 48 month 13. I've been trying to refinance and pay out the 13 for 4 or 5 months now. I do have enough equity in the house to pay off the mortgage AND the remaining Chapter 13 balance, but the problem is my credit...I can't get a 100% LTV on the house. Currently, the guy I am working with thinks I may beed $8,000 at closing...but as all of us in a Chapter 13 can attest, if I had that kind of money, I wouldn't be in this situation!!!

After reading this thread, maybe I should call the Trustee directly and see if he would accept the 11% repayment and not 100%, since I am under 36 months?

I live in Ohio...anyone have experience with this in this state?

[aa06a47]

Received a Case Summary Report

OK, in Saturday's mail, I received a Case Summary Report from the trustee. On the last page of it, there was a paragraph statement which I think all on this thread will be interested in. It goes..

"All cases must run at least 36 months unless all allowed claims are paid in full under the terms of your confirmed plan. Do not attempt to payoff your plan early without consulting with your attorney. All payoff request must be made by filling the proper paperwork with the Court and having the Court enter an Order for the Trustee to provide a payoff figure."

It is very plain to see they want your life for 3 years unless you can pay all creditors 100%... then after that you can petition the court for a payoff amount. I am not sure if the trustee will allow you to pay the pot or not.