Early payoff in a 60 month Chapter 13 plan

[k.p.]

What is the name of your state?What is the name of your state? New Jersey

Hi...and thanks in advance for any help . I am in month 28 of a Chapter 13 bankruptcy plan that my husband and I filed jointly. Due to the amount of the debt, and the amount of our disposable income, the plan duration is to be 60 months. It is NOT a 100% payoff plan. My husband and I have determined that our marriage is not workable. We are trying real hard to stick it out, pay off the bankruptcy plan, and fulfill our obligations before legally seperating. But, we are talking 32 months at this rate- and we don't know if we can make it!

There is no way we can maintain two households with the financial mess we are in. I have read, both here and in other research, that Bankruptcy Code states that all disposable income for 3 years must be paid into the plan. However, that after 36 months, that we ~might~ be able to prepay the balance left on our plan- without having to repay the debts (which were not included in the repayment plan) to our unsecured creditors. In our situation, the difference between 36 and 60 months is of vital importance- because I don't see us being able to live together for 2+ years. Family members know of our predicament and would be willing to help us make a lump sum payment at the 36 months if it would, indeed, get our bankruptcy discharged and allow us to begin divorce proceedings and get on with our lives.

My questions are these: Is the 36 month payment of disposable income a Federal rule? Or is this one of those guided by State statutes? Would there be any reference to it in our individual plan, other than the term of 60 months, that would guide me through this? If we can come up with the money after the 36 months, could the Trustee object to a prepayment at that stage? If he can, what is the likelihood that he will? Would we need to provide proof that the money for the pre-payment was not earned income? Would we be opening a can of worms in which the Trustee would likely want to examine everything under a microscope if we suddenly had $4,000.00 to send him at month 37 or 38? It's not that we have anything to hide, but in all honesty, this bankruptcy business makes me a nervous wreck. I'm afraid of losing my home, my equity, it's all I have - especially in light of knowing that I'm on the brink of becoming a divorced, single mom.

One last question....since our 36 months will come AFTER the new Bankruptcy Reform goes into effect- will that have any bearing at all on the questions I asked above?

Thanks so much for any input, it is VERY greatly appreciated!

[bigun]

This is one that's beyond the scope of an internet message board. You need to contact your attorney and lay all the cards on the table. If you don't mind, post back with the answer. The early payout question has started to come up with some frequemcy.

[giggle50]

Agreed that this is beyond the scope.

Get one thing straight, [URL=http://www.bankruptcycreditcounselors.com/law/]bankruptcy[/URL] is a federal law and not "guided by state statutes". State statutes deal with exemption of property.

Your plan may be guided by "local rules" which vary from district to district. Depending on your district, paying your plan off early may have the effect of red-flagging the trustee who may audit your case.

[karly66]

I'd like to know, too. I agree with the other two posters, probably best to see a lawyer on this and get professional advice.

Thanks

[ilcmd1]

I am in California

If you can get the funds to pay this off now, why not ask your attorny to amend your Bk and make it a 36 month Bk., increasing the amounts of the monthly payments to pay it off in the next 5 months.

There should be no fear in losing your home if the Bk. takes care of any arreages and brings you current. Usually there is written in your petiton, regarding a reaffirming with your lender. As long as you keep your payments current there should be no problem with the home. BUT!!! If you are late on even 1 payment, they would have the right to say you are in default and demand full payment or proceed with foreclosing on you. That of course, is if your home mortgage payments were in arrears and included in the Bk. as a priority secured debt. If you were not in default on your payments then it wouldn't matter. If your home mortgage is current, you could also convert to a chapter 7 and reaffirm with your home lender. There is no reason for you to lose your home if you keep current with your payments.

[k.p.]

Everyone- thanks for the input. I am going to talk to an attorney. Mine has been less than helpful lately. Guessing there is no more money to be had in this for him; and I'm sure, like most other BK attorneys, is being inundated with new clients trying to file before the October reforms. When I get any information, I will pass it on here.

Regarding amending the plan to become a 36 monther- not sure how I would do that, since our ~income~ would not justify it. Like I said, the money would be coming from family members, not from our earnings. I just don't want to try to ammend the plan to pay it off sooner, and end up having unsecured creditors coming after us because it would give the illusion that we have more disposable income than we had projected.

The mortgage was in arrears when we filed, so switching to a Chapter 7 and reaffirming would not be a possibility for us, either. We have kept current on the Trustee payments (to the arrears) and the post petition payments.

If anybody else out there has ever paid a chapter 13 off early (but after 36 months), would really like to know how the process went for you...and what sort of difficulties you ran into along the way. I know every case is different, but just looking for some point of reference.

Thanks again, so very much! I have a related question I will be asking in a new thread.