Can I Pay Off My Chapter 13 Bankruptcy Early?
Maybe. Sometimes you can pay off your Chapter 13 bankruptcy early, but only under specific circumstances. These include paying off everything that you owe or qualifying for a hardship discharge. The reason for this is that the bankruptcy court and the Trustee may not readily allow you to pay off your Chapter 13 bankruptcy plan early.
If you are thinking of paying off your Chapter 13 bankruptcy earlier than expected, talk to a knowledgeable Columbia, SC, Chapter 13 bankruptcy attorney. They can assess your repayment plan and communicate with the court and your bankruptcy trustee to determine whether you are eligible to close your Chapter 13 bankruptcy case as soon as possible.
Why Can’t I Pay Off My Chapter 13 Bankruptcy Plan Early?
Your unsecured creditors each get a part of what you owe through your disposable income. This income is the amount left over after you pay your monthly expenses, vehicle and house payments, back taxes, arrears, child support payments, and other required financial obligations. In a Chapter 13 bankruptcy repayment plan, creditors get the debtor’s disposable income until they pay off everything they owe.
Keep in mind that in your Chapter 13 bankruptcy repayment plan, it’s not just the amount you owe that you’re paying off. You also commit to using your disposable income to pay off creditors. Repayment plans typically last three to five years. The amount you’re paying was calculated based on how much you were earning when you created the repayment plan. This is why you cannot just pay off the plan early. If you suddenly earn more money, your creditors will also get a bigger payout under the repayment plan.
When You Can Pay Off Your Chapter 13 Bankruptcy Plan Early
You may be able to request the court to pay off your plan early if you can pay all your creditors everything you owe them. Once you’ve paid off everything, the court may give you a discharge and close your bankruptcy case.
On the other hand, if there’s a negative incident that suddenly affects your ability to complete your Chapter 13 repayment plan (a permanent disability, for instance), you can ask the court to grant you a hardship discharge to end (not pay off) your plan early. To receive a hardship discharge, you must show that your inability to complete the plan is due to unanticipated and uncontrollable circumstances, such as a substantial decrease in income, job loss, or severe health problems.
However, this relief can be difficult to secure, so you should discuss your case with a Columbia, SC, Chapter 13 bankruptcy lawyer to determine your eligibility and chances of receiving a hardship discharge.
Seek Legal Assistance From Our Skilled Columbia, SC, Chapter 13 Bankruptcy Attorney Now
If you’re planning on paying off your Chapter 13 bankruptcy plan early, reach out to our Columbia, SC lawyer to explore the options available to you. Find out how our Columbia, SC, Chapter 13 bankruptcy attorney at the Reed Law Firm can help you by arranging your free case evaluation by phone or online.
