Paid off Secured Loan

[denise07]

If I have a car loan that is secured and being paid outside the plan what will happen when the loan is paid off in the middle of my Chapter 13 plan? Will we have to start putting that money toward our plan?

[Armmick9]

We had the same situation, and yes we then had to start contributing that amount to our plan once our car was paid off. However, that was all discussed at our 341 meeting with our trustee. Our car was paid off within the first 6 months of our plan and I am assuming that is why our trustee noticed it.

We paid 6 months at a lower rate and then our plan went up.

[denise07]

We filed back in October of 2005 and have not even been confirmed yet. My car will be paid off at the end of April in 2007. I was wondering if we had to report it to the trustee once it is paid off.

[Jman30]

We filed back in October of 2005 and have not even been confirmed yet. My car will be paid off at the end of April in 2007. I was wondering if we had to report it to the trustee once it is paid off.

Between me, you and the crickets, I would tell the Trustee unless he asks. If it being paid outside the plan, then the Trustee really has no way of knowing. I know you are supposed to pay ALL your disposable income....but if you pay the car off in 2007 and have a couple hundred extra bucks and decide you want to a good citizen and give the Trustee more money......wait....who would do that?????

[Interlaw]

We filed back in October of 2005 and have not even been confirmed yet. My car will be paid off at the end of April in 2007. I was wondering if we had to report it to the trustee once it is paid off.

The answer really depends on your trustee. Some will require that the additional money available after the car is paid off be used to increase the Plan payments; others won't. You should ask your attorney what local practice is in this regard, since it varies so much.

Brett Weiss

Maryland, DC and Federal bars
Member, National Association of Consumer Bankruptcy Attorneys

[katze]

Our trustee objected to our plan because our vehicles were going to be paid off a few months before our plan ends. We had to add those payments into the plan before it would be confirmed. So now our plan payments increase after each vehicle is paid.

[aa06a47]

I have a 401k loan that will be paid off in the 3rd year of the plan, and since this was all dilvulged prior to confirmation and the trustee never said anything about increasing my payment in the 3rd year, I do not plan on bringing it back up.