Can I pay off my Chapter 13 bankruptcy plan early?

If you find yourself with extra money, you can choose to pay off your Chapter 13 bankruptcy plan early. Whether paying off your bankruptcy plan early is a good idea or not will depend on several factors. Things to consider before paying it off early are how many months you have been in bankruptcy, whether you’re required to commit to a 60-month plan, and the percent of your original debt that you are paying off. Call the toll free number above to speak with an attorney today about your bankruptcy repayment plan.

Get Legal Help Today

 Secured with SHA-256 Encryption

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Full Bio →

Written by

UPDATED: Jul 16, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

When you enter into a Chapter 13 bankruptcy, you are required to create a repayment plan that is approved by both the court and by the creditors. The amount of money you must repay each month under this plan is set based on your income as well as the amount of eligible debt you are including in the plan. While the time limit for repayment can vary, the normal time for a Chapter 13 bankruptcy repayment plan is between three and five years. However, if you find yourself with extra money for some reason, you may decide to repay your plan early. This may be possible, but whether paying off your bankruptcy plan early is a good idea or not will depend on several factors.

Early Payment of a Chapter 13 Bankruptcy Repayment Plan

Under the law, you are allowed to repay a bankruptcy plan early. However, before you consider doing so, you need to consult with a bankruptcy attorney because it could affect your bankruptcy plan.

There are a few major factors that determine how early payments will affect your bankruptcy plan. The key factors include:

  • How many months you have been in bankruptcy;
  • Whether you are required to commit to a 60-month plan;
  • The percent of your original debt that you are paying your creditors under your repayment plan.

Generally, if your original bankruptcy plan was set up so that you would pay off 100% of your debts over the course of your plan, you can complete the plan early without problem. If you didn’t file a 100% plan, however, and you were only paying back a portion of what you owed, then the situation becomes more complicated. In such instances, whatever increase in wealth is allowing you to pay early may also need to be included in your bankruptcy estate.

The fact that your estate is thus made larger could lead the Trustee to require you to amend the plan. The amended plan could require you to pay off more of your debt through larger payments, which would mean that your plan to finish early just backfired. 

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption

Getting Help

Before paying off a bankruptcy plan early, you should consult with a local bankruptcy attorney to determine whether this option makes sense in your circumstances. Instead of paying off your bankruptcy plan early, you may be better off building up your reserve savings in the event of an emergency or doing other things with your extra cash, as for example, investing or saving for your future.  

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption