In chapter 13, can I pay off my plan early or make larger payments to the Trustee so I can finish quicker ?

Posted on August 7, 2013. Filed under: Chapter 13 Bankruptcy | Tags: |

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The Bankruptcy Code requires that you send all your disposable income to the Trustee for the number of years you are in the plan. Your disposable income is the amount left over after you subtract your reasonable and necessary expenses from your net income. This amount is shown as your payments set out in your plan.

Paying off your plan early can be complicated and you should check with your attorney before you contact the Trustee. (Making larger payments to the Trustee may be required, though, if your income increases.) As soon as the trustee receives unexpected extra payments, he will wonder where you got the extra money. So if you want to make larger payments because you got a big raise amounting to more than 10% of what you originally reported as your income, you should inform the Trustee of that fact when you begin sending in more money. You will, however, still be required to make payments to the Trustee for the number of years of your plan unless you can pay all you creditors 100% (See above)

Remember: Do not borrow money to make bigger payments to the Trustee hoping that you can complete your plan early. You are in this to eliminate your debts and get a “fresh start”. Your best bet is to make your scheduled payments using your disposable income right on time!

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