100% plan and extra payments

[lebt2006]

Afternoon!

This is probably a question more for my attorney or trustee, but maybe you all can help me:

I'm in a 100% plan. So far, the payment plan is 36 months. Lets say my wife and I get our ducks in a row, start to make more money as time goes on, and want to pay towards the plan more. Can we pay towards the plan (like one extra payment a month) and not get into any trouble because we paid the plan off earlier than allotted? Will we give the trustee and/or creditors the wrong impression if we pay off the plan faster (leading to an objection of discharge)?

[justbroke]

I would not make extra payments. I would save until you have at least 6 months of reserves to pay for all of your monthly expenses over that six months (e.g. rent/mortgage, food, clothing, gas, car payments, etc).

In my humble opinion, there's no reason to prepay -- or make payments in advance -- in a 100% Chapter 13 plan, unless you have 6 months of reserves already saved. The only way I would say to prepay, is if you're making a balloon payment to payoff the entire Chapter 13 Plan and those funds are sourced from a major transaction (such as the sale of a home or winning the lottery). Even in those instances, I still like to see the 6 months of reserves.

If you ask why the 6 months... my answer is simply... pandemic.

[sophieanne]

Hi...I agree with Justbroke about having savings first during this pandemic. Having said that I was also in a 100 percent plan and as time went on was able to make extra payments.There was no problem or concern. My plan was paid off in 4 instead of 5 years. Just look after yourself first 😄

[flashoflight]

During this pandemic, most folks should be in fear of either losing their jobs, having their salaries cut, or being furloughed. Savings are much more important than paying 100% early. In my circle of friends, 20% are unemployed and more than half have had their incomes cut already by losing 401k matches, reduction in hours, salary reduction, etc. Catching covid right now even if the job is safe could put a big monkey wrench into your plans to repay 100%. You don't get skip-a-monthly payment rights if you pay extra. Don't do it until you are ready to pay 100%.

[lebt2006]

Thanks guys(and gal) on your advice. My goal was 3 months of emergency funds, get through the pandemic, then get ready to pay extra as time went on (honestly, I'd try to shave 6 months off of my plan if I could by the end). You guys basically re-enforced what was in my mind, so I thank you. flashoflight I'm sorry to hear about your friends, hope it all starts to turn itself around