Can I keep the monthly payment amount I paid for my car loan when it’s paid off in Chapter 13?

I am a year in my Chapter 13. In 11 months my car loan will be paid which is $500 a month. When it’s done, will the Trustee know that? I’m hoping that I’ll be able to keep the $500 a month to save for the remainder of the plan or will I have to tell her and have the entire plan reorganized to include the $500 a month in money I’m not using to pay the loan off anymore.

Asked on March 18, 2011 under Bankruptcy Law, California


MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Yes and yes. You will have to tell the trustee you have additional assets (as income) and that will be used to help determine how to reorganize your debt and might actually be to your advantage. The bottom line is a Chapter 13 is simply a reorganization wherein a debtor has the ability to repay debt but in a longer or different time frame as opposed to a full bankruptcy wherein most dischargeable debts are indeed discharged. You must inform your trustee of all assets and a simple search at the local DMV title bureau (which most trustee can do and do as part of the due diligence) will see you own a vehicle with a lien and then will know who is your lender and how much you owe. You must tell your trustee when the loan is paid off (and again a title search can reveal that information as well). You must be straightforward with your trustee and the bankruptcy court; otherwise, you can risk the entire bankruptcy will be dismissed and you can get into serious trouble for attempting to hide assets.

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