Would this be fraudulent?

[leftyf]

What if I enter into a chapter 13 at, obviously, the lowest monthly payment possible and "figure out a way" to come up with all of the money to pay it off at once? No, I would not be doing anything illegal to come up with the cash. I assume the Trustee would have a big problem with this, but I'm not sure? My guess is that I would be back in court in no time...I would come up with the cash from relatives and or my own retirement account (yes, I know about the tax penalties.)
Thanks,
Lefty

[Granny]

Sorry Leftyf, you can't buy out under the new law.

[HHM]

Sorry Leftyf, you can't buy out under the new law.

Ditto, you cannot buy-out a plan. Once you file chapter 13, the only way to "buy-it-out" and receive a discharge is to pay 100% of the claims of creditors that get filed.

[lrprn]

What if I enter into a chapter 13 at, obviously, the lowest monthly payment possible and "figure out a way" to come up with all of the money to pay it off at once? No, I would not be doing anything illegal to come up with the cash. I assume the Trustee would have a big problem with this, but I'm not sure? My guess is that I would be back in court in no time...I would come up with the cash from relatives and or my own retirement account (yes, I know about the tax penalties.)

The new bk law that went into effect Oct 05 confused Ch 13 early buyouts considerably because the new law doesn't include any language about how to do it like the old law did. The districts that do allow early buyouts now won't even consider it until after three years of on-time payments in a five-year plan, and after two years on on-time payments in a three-year plan.

If you are allowed to buy out of your Ch 13 early, after the appropriate number of years your lawyer contacts your trustee to get the exact payout figure. You will have to pay back all your creditors who filed claims 100% to get out early, even if your payback % is lower if you completed your plan as confirmed.

[Minnymouth]

Questions,

Why file bankrutpcy IF you INTEND to do a buy-out as quck as you can???
Either borrowig money from friends, or using your 401K.....

What purpose would filing bankrutpcy fill??? Other than your credit being "trashed" for the next 3-7 years.....

If you intend on buy-out - after getting into a Chapter 13 - pay backs would be at 100% anyways......

So...... why not negotiate (can't spell) with your creditors on a settlement of account............ you may even only end up paying 75% of the balance to be free of the debt.....

Filing bankruptcy would protect you from "having to use" your 401k or retirement to pay these debts..... and they would be paid off under a Chapter 13 payment plan with the protection from the creditors thru the Bankruptcy Court.....

I don't understand you wanting to file bankruptcy and then turn around and use your retirement to pay them off quickly............... explain......

Minny

[HHM]

Minny, I think what leftyf was thinking is that he would file chapter 13, and his disposible income is such that perhaps he would only pay 10% to unsecureds (or some low amount), lock that amount in to the chapter 13, and then buy out that lower amount and be discharged. But, unfortunately, he wont be able to do that.

But honestly, you couldn't even do that under the old law, let alone the new law. (even under the old law, most trustees wanted you to be in the plan for at least 6 months to a year).

It is kinda like a forced settlement, but the new law put a quash on the ability of a debtor to go this route.

[Minnymouth]

Okay, I thought maybe that was what he was trying to do....... high hopes, but a "no-go" on that idea......

[leftyf]

Exactly, I was hoping for the 10% payoff.

[Minnymouth]

Yeh, we all could "dream of that", huh.............. wishful thinking....... Life is NOT THAT KIND!!!

[Granny]

Why not just quit paying the CC, let them send a 1099 and pay the tax on the 1099. That's a cheap payout.

[CindyLou]

why not file the chapter 13 at the 10% payments and keep the retirement right where it is?

[SinkingFast]

If your retirement is in an ERISA Qualified Plan, it's protected in BK.

Personally, I'd wouldn't borrow from relatives to pay off CC debt. What if,..... Next week, next month, next year,......... You have a major personal need. Say medical. An injury. You get laid off and need money for rent. If you tap relatives now to pay CC's, they may not have the resources to help you later when you need it for a life necessity.

Old Law, you could pay off/buy out of your Ch 13. At the 36 month mark. New Law does not have verbage regarding early pay off. Since no Ch 13's have gotten to the 36 month mark under New Law, it's not yet known how that's gonna be handled.