{"id":428,"date":"2012-10-13T22:21:57","date_gmt":"2012-10-13T22:21:57","guid":{"rendered":"https:\/\/mn-bankruptcy.com\/blog\/?p=428"},"modified":"2025-08-11T19:17:24","modified_gmt":"2025-08-11T19:17:24","slug":"paying-off-your-chapter-13-plan-early","status":"publish","type":"post","link":"https:\/\/mn-bankruptcy.com\/blog\/paying-off-your-chapter-13-plan-early\/","title":{"rendered":"Paying Off Your Chapter 13 Plan Early"},"content":{"rendered":"
\nStick with your Chapter 13 Plan<\/p>\n
From time to time I am asked the following question by a potential Chapter 13 client:\u00a0 If somehow I could come up with the money, could I pay my Chapter 13 plan off early?\u00a0 If you\u00a0 have ever seen a Chapter 13 plan, it is easy to understand how this question would arise.\u00a0 The plan document provides for monthly payments in a certain amount, and then it shows what the total of the payments over the life of the plan will be.\u00a0 It shows how all the money is\u00a0 to be applied – so much to unsecured creditors, so much to attorney fees, so much for the trustee’s fees, and certain amounts to taxes or other priority debts.\u00a0 Usually it will even state in terms of a percentage exactly what fraction of the unsecured debts are being paid.<\/div>\n

It seems obvious that once the plan is approved, if the Debtor could come up somehow with the total due under the plan, he or she should be able to\u00a0 wrap it up early and get their discharge early.<\/p>\n

Well, guess what.\u00a0 That’s not how it works.\u00a0 Or at least it usually is not how it works.\u00a0 Simply stated the rule is this:\u00a0 the only kind of Chapter 13 Plan that can be paid off early is a 100% plan.\u00a0 Chapter 13 plans fall into two categories:\u00a0 100% plans and\u00a0 less than 100% plans.\u00a0 In a 100% plan, all the unsecured debt is to be paid under the plan.\u00a0 In a less than 100% plan, only a portion of the unsecured debt is to be paid.\u00a0 The vast majority of Chapter 13 plans are of the less than 100% variety.<\/p>\n

So in most plans, where less than all of the unsecured debt is scheduled to be paid, the trustee will welcome extra payments from folks who have come into extra money that was not expected, such as an inheritance or big bonus at work.\u00a0 In fact the trustee might REQUIRE that such funds be paid into the plan.\u00a0 But after that extra payment is made, unless the plan is of the 100% variety,\u00a0 the regular plan payment is due again the next month – and that continues until the end of the plan or until 100% of the unsecured debts are paid, whichever comes first.<\/p>\n

The result of all this is that in most Chapter 13 cases, it is self defeating to take draconian measures for the purpose of raising extra money to pay into the plan.\u00a0 Unless you can raise enough to pay off 100% of the unsecured creditors who have filed their claims with the bankruptcy court, there’s no reason to make an extra effort.\u00a0 In fact you might be more or less punished for any such extra efforts.<\/p>\n

If you are in Chapter 13 and receive extra money from somewhere, consult your attorney about it right away.\u00a0 If the\u00a0 amount is significant enough you probably have an obligation to report it to the bankruptcy trustee.\u00a0 Sometimes your lawyer can negotiate a deal which allows you to keep some of the funds and pay in only part of it.<\/p>\n

This post is for general information purposes only and does not create an attorney-client relationship.\u00a0 It is not legal advice.\u00a0 Seek the advice of your own attorney concerning the details of your case.<\/p>\n

David Kelly Law Office is a debt relief agency helping people to file for relief under the federal bankruptcy code.<\/p>\n","protected":false},"excerpt":{"rendered":"

Stick with your Chapter 13 Plan From time to time I am asked the following question by a potential Chapter 13 client:\u00a0 If somehow I could come up with the money, could I pay my Chapter 13 plan off early?\u00a0 If you\u00a0 have ever seen a Chapter 13 plan, it is easy to understand how … <\/p>\n

Continue reading “Paying Off Your Chapter 13 Plan Early”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,69,107],"tags":[149,147],"class_list":["post-428","post","type-post","status-publish","format-standard","hentry","category-bankruptcy","category-chapter-13","category-filing-process","tag-minnesota-bankruptcy-lawyer","tag-minnesota-chapter-13-bankruptcy"],"yoast_head":"\nMinnesot Bankruptcy Lawyer discusses Paying Off a Minnesota Chapter 13 Plan Early - or Not<\/title>\n<meta name=\"description\" content=\"Best to just stick with your Chapter 13 plan and not try anything fancy after it has been approved by the court. 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Sometimes that seems like a long time, and other days I feel as if I just started. These days my practice is devoted entirely to counseling folks concerning their financial problems and representing them in Chapter 7 and Chapter 13 bankruptcy. One thing I don't do is credit repair. When asked about matters concerning credit scores, I like to say \\\"I'm a very good source of unreliable information about that.\\\" What I mean is that I hear a lot about it from my clients who often report back to me how they are doing after their bankruptcy is completed, sometimes even years later; but having heard some stories from a few people doesn't qualify me to give any advice. I spend a lot of time with my clients. I want to be sure we get it right. There are civil and criminal penalties for concealing or providing incorrect information in a bankruptcy care, and my goal is to keep myself and my clients as far away from problems like that as possible. You can find me in MInnetonka near I-394 and Hopkins crossroad. It's ten or fifteen minutes from downtown Minneapolis. You can see parts of Plymouth, Minnesota, Golden Valley, Minnesota and St. Louis Park, Minnesota from the high ground in front of my building. If you take a look at the map, you can see that most of St. Louis Park is closer to my office than many parts of Minnetonka.\",\"sameAs\":[\"http:\/\/www.mn-bankruptcy.com\"],\"url\":\"https:\/\/mn-bankruptcy.com\/blog\/author\/davekelly\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Minnesot Bankruptcy Lawyer discusses Paying Off a Minnesota Chapter 13 Plan Early - or Not","description":"Best to just stick with your Chapter 13 plan and not try anything fancy after it has been approved by the court. 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