Early Pay Off, HELP

[00redlrod]

I need some advice. I am in month 48 of 60 in my 13, can I call the trustee and pay the remainder of my plan to them. I would rather not go though my lawyer if at all possible they will not call me back. Everything I have read on this forum leads me to believe that after 36 months I can just pay off the remainder of the plan (10% over 5 years). I could obtain a loan from a family member as my own financial situation has not changed. The money I currently pay per month to the trustee would help greatly since the gas prices are rediculous and I work a good distance from home. I worry that things my get too bad to wait for the added monthly income for the next 12 months. Any advice is greatly appriciated. ( I am a Georgia Resident, if it matters)

[justbroke]

I need some advice. I am in month 48 of 60 in my 13, can I call the trustee and pay the remainder of my plan to them. I would rather not go though my lawyer if at all possible they will not call me back. Everything I have read on this forum leads me to believe that after 36 months I can just pay off the remainder of the plan (10% over 5 years). I could obtain a loan from a family member as my own financial situation has not changed. The money I currently pay per month to the trustee would help greatly since the gas prices are rediculous and I work a good distance from home. I worry that things my get too bad to wait for the added monthly income for the next 12 months. Any advice is greatly appriciated. ( I am a Georgia Resident, if it matters)

I'm not sure if anyone is quite sure with what the BACPA (2005 Amendments to the Bankruptcy Code) did to the early buyout "option". However, you have been in Chapter 13 since before the new Amendments, so you will probably have no problems buying it out.

Since you've completed 80% of the term of your Plan, the Trustee may be amendable. You could call the Trustee's office and just ask a "question" of the staff... a what if. They can't give legal advice anyhow.

The Trustee and Court have to approve the buyout, as far as I know. I have been "planning" and thinking about re-financing after year 3 (I have lots of equity) and buying out my plan. I haven't actually done it or know first or secondhand or anyone who has.

[Flamingo]

If you have a five year plan, you filed old law as the new law went into effect in October 2005 and you state you are in month 48. We bought out early under the old law and you can do so after month 36 of your Plan if you are eligible to do so. Your attorney is the person to start this inasmuch as you have to prove you are able to buy out and how you are buying out as the Trustee is the one who approves this and since you are represented in your Plan by an attorney, you need to work through your attorney.

Contact your attorney (you say you can't; have you shown up at his/her office in person if no one returns your phone calls?) and tell him/her what you would like to do; if it is possible, the attorney will contact the Trustee and if the Trustee is in agreement with the situation, both the attorney and Trustee together will file a Motion to the BK Court to allow you to buy out early. Note - there will be a cost for the Motion; ours was $400, as it is not considered a regular part of your BK retention fee and is over and above the regular fee.

People filing under the new law may not be able to do this and from what I have seen on here, if they want to will have to buy out at 100% of their plan even after month 36 if they are on a five year plan.

[mynameainttracy]

At our 341 the trustee told us that if we wanted a quote for a payoff to call their office directly. He was pretty serious about stating that he wanted serious inquiries only because of the work his people would be doing to generate the quote.

[oldrocker]

At our 341 the trustee told us that if we wanted a quote for a payoff to call their office directly. He was pretty serious about stating that he wanted serious inquiries only because of the work his people would be doing to generate the quote.

I have the same trustee as mynameainttracy, in our district we can buy out after 6 months for just the plan amount.

[Flamingo]

The OP is old law....there has been nothing generated yet as to the new law as to buying out for less than 100% prior to month 36 of one's Plan. If someone has some case law or section of the code indicating otherwise, please post it.

[justbroke]

The OP is old law....there has been nothing generated yet as to the new law as to buying out for less than 100% prior to month 36 of one's Plan. If someone has some case law or section of the code indicating otherwise, please post it.

I'm no lawyer, but my plain reading is consistent with what you write.

It doesn't make any sense to allow someone to buy out a, say 10% plan in Month 12 of a 60 month Plan! It is just fraught with abuses of the code. By having you sit 36 months in a Plan (because this is the minimum required by the Code), the Trustee can monitor your income and, perhaps, get more money for the unsecured creditors.

I think this is where people go wrong. They forget the Trustee is the Creditor's Trustee (really). That the Trustee is looking out for the Creditors and trying to maximize their payback, while being a neutral third party. (At least, that's how I see it.)

The only other way out prior to your plan's commitment period, is a hardship dismissal (and probably conversion to Chapter 7), or paying the unsecured creditors 100% in the post-BACPA world. (Or, just voluntarily dismissing your case, but the creditors will come for you.)

I don't see how you get away with not paying 100%, even in a Plan of 5 years because the additional paragraph was added as part of the BACPA (2005).

(A) subject to subparagraph (B), shall be--

(i) 3 years; or

(ii) not less than 5 years, if the current monthly income of the debtor and the debtor's spouse combined, when multiplied by 12, is not less than--

(I) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner;

(II) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or

(III) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $525 [$525 (added by BAPCPA 10-17-05)] per month for each individual in excess of 4; and

(B) may be less than 3 or 5 years, whichever is applicable under subparagraph (A), but only if the plan provides for payment in full of all allowed unsecured claims over a shorter period.

[00redlrod]

Thanks Flamingo, I'm sure I am under the old law. I faxed a request letter to the trustee after talking with them. They told me what info to fax and that they would generate the pay off amount and send it to me. I will not know the actual pay off until I get the info from the trustee (plan amount vs. 100%). They did however tell me that when I recieved the pay off letter I could just send the amount directly to them, and they would initiate the discharge paperwork to be sent through the court. Unfortunately the process for discharge will take up to six months, but the bright side is I will not be paying the monthly payment. Thanks again all.

[Flamingo]

Thanks Flamingo, I'm sure I am under the old law. I faxed a request letter to the trustee after talking with them. They told me what info to fax and that they would generate the pay off amount and send it to me. I will not know the actual pay off until I get the info from the trustee (plan amount vs. 100%). They did however tell me that when I recieved the pay off letter I could just send the amount directly to them, and they would initiate the discharge paperwork to be sent through the court. Unfortunately the process for discharge will take up to six months, but the bright side is I will not be paying the monthly payment. Thanks again all.

Make sure you notify your attorney of what is going on here. I am surprised the Trustee is working with you directly on this and not involving your attorney. I guess since you are not doing a refinancing you may not need a Motion and it depends on where you are obtaining the funds to pay this off. Or you still may need a Motion, that is why I am stating to contact your attorney. Since you are Old Law, you will not pay back 100% of your Plan but the percentage amount of the confirmed plan. That will be indicated on the information you receive, including Trustees fees. Make sure you check that you do not have to continue making plan payments during the time prior to the payoff...watch it - contact your attorney. Make sure you get that in writing from the attorney or Trustee. That six months can bite you if something falls through.

[oldrocker]

[justbroke]

OK, now I don't know legaleze, I can't quote bk law. But I read that section to mean what it says; "for confirmation of plan" the "applicable commitment period" can only be less then 3 yrs if its 100% payback. It addresses the confirmation of the plan, nothing about early buy out.

It's a shame that things are inconsistent between Districts! Even the BAP rulings and Circuit Court rulings in the Districts are not binding on other Districts. There is some good caselaw in some districts.

Example, Judge Funk in Jacksonville, FL, allows cramdown on vehicles regardless of the so-called 910-day rule, when the loan includes negative equity. However, in the 8th Circuit, the Appellate court says that negative equity is part of the purchase price. Much of this has to do with underlying State Bankruptcy Law, so decisions could be different.

FWIW, "applicable commitment period" is what drives the Plan. It's not just about "confirmation". Otherwise, someone could confirm a plan, then amend it to not abide by the commitment period rules. Some Districts have chosen to think about it as you posted, that it's only in respect to the plan and is a multiplier only.

It never hurts to ask your lawyer.

[Flamingo]

"You can buyout after December 1, 2008 for the amount due under the plan. If you are not certain as to the exact amount you can call xxxx(name of paralegal) or I. Upon payment you will then have to affirm that you do not owe on any domestic support obligations after which time you will receive a discharge."

After Dec 1st would mean after my 6th payment. He had told me earlier that if I filed in the next district over there was no early buy out. So apparantly like most everything else in bk its going to depend on what district you're in.

OldRocker - the first paragraph you quote above was in an email from your attorney - I deleted part of your posting to not take up too much space. I think what your attorney means is that you will be able to buy out early (i.e., "for the amount due under the plan") as meaning your plan at 100% minus what you have already paid in. It appears you have to wait six months for that option in your district. I don't know how two districts next to each other would not follow the same BK law. Something is not right there or your attorney is incorrect as BK law is BK law. Trustees, states and districts vary as to their requirements and exemptions under the BK law but they can't make their own BK laws or variations thereof. With what has been posted as to the new law, it appears clear that you cannot buy out prior to 36 months unless payback is 100%, minus what has been paid into the plan. Until someone actually buys out early and posts their location and situation on here, no one knows what will occur. The 36 month mark for new law Chapter 13 filings is this October. No one yet under the new law has come on here as to any steps or advice being given them as to buying out early in a five year plan if they filed in October 2005.

I think in time this will get straightened out on here for those contemplating an early buyout or maybe those in the process or thinking about the process right now can post their experirences and advice as to what they have been told since they would be close to the 36 month mark.

However, the OP is old law and does not fall under this - he will be able to buy out under the old law and is eligible to do so at the percentage of his confirmed plan minus what he has paid in plus Trustees fees.

[00redlrod]

To quail any argument, I got this from the horses mouth. I faxed a request to my atty for the early pay off amount, what was sent to met was the ammount owed accordig to the 10% plan I entered into. To clarify I am in month 48 of 60 and was explained, by the trustee in the letter, to just send in the plan pay off amount to the office just like a regular payment. Once the payment was rcvd the court would start discharge procedings. I did file befor Oct '05 so I would fall under the old laws. As my situation would only help a dwindiling number of the people in this forum I will post the overall outcome as soon as it is completed. It appears to matter what district you file in also, I filed in the Southeast Georgia District. (I have no direct withdraw from pay, no review of salary, and keep all tax returns). Thanks to all for the replies, and if it will help anyone else I will post final outcomes as soon as I can.

[Flamingo]

To quail any argument, I got this from the horses mouth. I faxed a request to my atty for the early pay off amount, what was sent to met was the ammount owed accordig to the 10% plan I entered into. To clarify I am in month 48 of 60 and was explained, by the trustee in the letter, to just send in the plan pay off amount to the office just like a regular payment. Once the payment was rcvd the court would start discharge procedings. I did file befor Oct '05 so I would fall under the old laws. As my situation would only help a dwindiling number of the people in this forum I will post the overall outcome as soon as it is completed. It appears to matter what district you file in also, I filed in the Southeast Georgia District. (I have no direct withdraw from pay, no review of salary, and keep all tax returns). Thanks to all for the replies, and if it will help anyone else I will post final outcomes as soon as I can.

Hi 00redlrod! You situation is not the problem. You are old law so once you hit month 36, if you were able (and you appear to be able) you can start the process to buy out of your plan at your plan confirmation rate and not 100%. As you have found out, you can do that. What people are discussing in here right now (and should start a new thread) is what will occur as to folks filing Chapter 13 and having a 5 year plan under the "new" law effective 10/05? The 3 year mark is just next month for folks filing under the "new" law and not too much has been discussed about anyone buying out and their circumstances...anyone under the old law that has made all their plan payments on time and have the funds or equity in their house to buy out of their plan and has hit the 36 month mark of their plan can investigate buying out. There are still some people who have two years left on their plan if they filed just prior to the new law going into effect and have a 5 year plan. Not too many people are able to buy out.

Best of luck on the soon to be completion of your Plan!