Get out early or not?

[archeebunker]

Hi, first post. Thanks in advance for any replies.

I will be four years into a Ch 13 in May 2009. Its a five year plan, that looks like it will end early if I let things run their course. I have the ability to pay off my plan now based on multiplying the $516/mo by the number of months left.

I obviously want to get this behind me as soon as possible, but I also dont miss the monthly payment anymore, and I like having cash in the bank. It would cost me about half of what I have managed to save if I payed off the trustee.

Is it generally good to buy out of a Ch 13 early or not? I'm not sure what to do here.

[oldhack]

Is it a 100% payback plan? Generally, in order to end a Chapter 13 plan early, you must pay back 100% of claims. Thus, if it's less than a 100% plan, you'll need more money than simply your current payment X months left. If it IS a 100% plan, get out as soon as possible, without leaving yourself penniless in the interim (it will take 2-6 months to discharge/close after final payment).

[krielly]

The OP filed Old Law (if he's 4 years into the plan in May). The 100% may not apply as he is beyond the 3 year window.

Archee - Did you file with an attorney? Give him/her a call. Your attorney is the best source for that particular question, as they know how your trustee will react, and whether or not they will be receptive. I think you might be pleasantly surprised, as you filed OLD law, but I can't guarranty that.

Let us know what he/she says about this.

Good luck!
K

[archeebunker]

I am indeed under the old law.
I live half way across the country from my attorney, since I moved out of state.
His office generally doesnt seem to interested in dealing with my case as I'm sure theyre busy handling new cases.
I'll still have a decent sized cash account even if my payoff is a little more than expected. I just want to get some opinions on whether buying out early is generally a good thing or not.
I'm very undecided at this point. Honestly life has been good for the last few years. I save a very significant amount every month, I havent taken on any new debts in four years, and I feel like I"m gonna come out of this MUCH better off for having dealt with it. The only issue I can foresee is trying to fix my credit report and maybe getting a car loan at some point. But my vehicle is in good shape and I dont foresee buying another one in the near future. I dont miss the garnishment money anymore. It'll be like a payraise when its over- then I can save even more each month. I just dont know if I want to try to end this right now, or just let it ride till the end.
Thanks for your replies.

[or30313]

I am indeed under the old law.
I live half way across the country from my attorney, since I moved out of state.
His office generally doesnt seem to interested in dealing with my case as I'm sure theyre busy handling new cases.
I'll still have a decent sized cash account even if my payoff is a little more than expected. I just want to get some opinions on whether buying out early is generally a good thing or not.
I'm very undecided at this point. Honestly life has been good for the last few years. I save a very significant amount every month, I havent taken on any new debts in four years, and I feel like I"m gonna come out of this MUCH better off for having dealt with it. The only issue I can foresee is trying to fix my credit report and maybe getting a car loan at some point. But my vehicle is in good shape and I dont foresee buying another one in the near future. I dont miss the garnishment money anymore. It'll be like a payraise when its over- then I can save even more each month. I just dont know if I want to try to end this right now, or just let it ride till the end.
Thanks for your replies.

We just paid off early under the old law. We paid off as quickly as we could.

We didn't deal directly at all with our attorney. Instead, we talked directly with our trustee's office who told us we could accelerate payment and gave us the final pay-off balance when we got close.

We thought paying off early was a good choice for a few reasons: First, we had some student loan debt that was included (but not excused) in the plan. We wanted to pay off early so that we could aggressively attack that debt and get it paid off as soon as possible.

In addition, we would like to improve our FICO to eventually buy a house (we're renting). We figure the quicker we pay off, the better our FICO when we're ready to buy again in about a year.

Lastly, we just wanted this whole mess behind us. We were self-employed at the time when we filed. So, we've been required to pay via cashier's check every month. I was really tired of going to the bank every month and telling the cashier the payee (the trustee) only to get a condesending eye (it was probably imagined, but I hated it nonetheless).

Incidentally, just today, we received a copy of the letter from the trustee to the court that we have completed our plan. I guess that means we're about four weeks from receiving our final discharge. Wooo hooo.

[Flamingo]

To the OP - we too were old law. We bought out early cause we needed the funds to put a new roof on our house - the roof could not make it another 1 1/2 years under our Plan. We contacted our attorney who reviewed the situation, saw we had enough equity to by out and refinance to have money for house repairs/new roof, we had to obtain financing and provide that information to the attorney who then contacted the Trustee and together with the Trustee filed a Motion allowing us to buy out early and refinance. If you are interested in buying out early (which you can do under the old law if you are not at 100% and past 36 months, which you are), start now in making inquiries because it can take a few months to get it completed and longer if one has to refinance. I would call your attorney to go over this and put him/her on alert as he/she represents you in your Plan and he/she will have to work with the Trustee anyway. Best of luck to you!

[$$only4ever]

I inquired about paying off early (Chapter 13 old law too), but the trustee's office said that if the payoff was a sizeable amount, then it has to go before a judge and they will ask where you are getting the money from. If it was only a few payments, then there would be no problem. So, if you are not refinancing, you may want to keep paying monthly payments until the balance is pretty low. Just my opinion...

[BigJohn]

In our plan, we pay back 'fumes' to the unsecured creditors, and if we try 'cashing out' as if it was a 36 month or less plan, we would have to pay back at a 100% rate. For us to go for an early pay out would not be very wise.

[EricaCallaha]

I say if you can afford it and the trustee isn't going to be raising any red flags...go for it. Get on with your life without the trustee.

Good luck.