Is an early payoff possible?

[BKinMaine]

I'm 2 years in my 5 year plan. It is not a 100% repayment plan (only the IRS is getting the full amount owed). Early on, my attorney mentioned something about possibly paying off the remaining balance of payments at close to the end of year 3 or so. He brought up a scenario where my wife could possibly "loan" me the money to pay off the balance (she is not included in my BK).

While I realize I need to talk to my attorney about this, I wanted to know if anyone has done something like it. My attorney isnt great about getting back to me with clear information so I thought I'd ask here too.

Thanks!

[justbroke]

In "some" districts in "some" cases, "some" Chapter 13 Trustee's will allow "some" debtors to end a 5-year Chapter 13 earlier by paying only the plan base once 3 years has passed.

I keep writing (and emphasizing) "some" because it is way too District, Trustee and debtor-specific to be any sort of thing that is done normally. It happens "sometimes" and in "some" cases, but I can't point to one single case where this was allowed. I have heard of it, anecdotally, but have never seen a case where a person who is "over-the-median" and is supposed to be in a 60-month (5 year plan) has been allowed to just pay their "base plan" at 36 months and be done.

[shipo]

I asked a similar question to my attorney and she said, if the Trustee even catches wind you have some spare cash to pay off things early, he'll come nosing around to see if he can bump your monthly contribution to provide more relief to the unsecured creditors. She said, the only to "pay early" is the last payment; wait for the penultimate payment to have been posted, and then pay the final payment shortly thereafter.

[Paper33]

My understand is if taxes are invovled then you shouldn't get out early.

[justbroke]

My understand is if taxes are invovled then you shouldn't get out early.

It wouldn't technically matter, and here's why.

You can use a Chapter 13, of course, to payback taxes that you owe. Another nice thing is that you can actually discharge taxes which meet a certain criteria. So, if you don't have enough disposable monthly income (DMI) to payback these (non-priority) "unsecured" taxes, then they are discharged along with all the other debt. The problem becomes if you want to payoff your Chapter 13 early. At that point, that you want to get out early, you must pay ALL of the unsecured debt. That means that the IRS "dischargeable" taxes would come back with a vengeance.

So there's no issue with getting out early if taxes are involved. I actually converted my first Chapter 13 to a Chapter 7. That original Chapter 13 had back taxes. Upon discharge of the converted (Chapter 7) case, I just went back on an OPA (online payment agreement).

Overall there are many strategies and reason to (and not to) convert a Chapter 13 to a Chapter 7. The most dangerous one is not the federal taxes unless you're trying to discharge a bunch of old tax debt. The most dangerous is arrears from a mortgage and issues with the automatic re-amortization of the car loans that were in the Chapter 13. Conversion to a Chapter 7, with mortgage and vehicle arrears, can prove to be the most problematic of them all.