Can You Pay Off a Chapter 13 Early?

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When you filed for Chapter 13 bankruptcy, the bankruptcy court put you on a repayment plan, allowing you to pay your creditors a portion of what you owe over time with monthly payments. Repayment plans are scheduled to end within three to five years, but that date is not set in stone. You may be able to end your bankruptcy case sooner if you have the cash to pay off your debts in full. However, you can only do this if you get permission from the bankruptcy court.

Chapter 13 Repayment Plans Last for Years

  • Unlike with Chapter 7 bankruptcy that requires you to give up your assets, which are then liquidated to pay off as much debt as possible, Chapter 13 lets you hold on to most of your possessions by allowing you to pay your debts over a period of time through a repayment plan. Chapter 13 plans typically last between three and five years, and most debts that remain unpaid at the conclusion of the plan are discharged and no longer your legal responsibility.

Must Pay Off Total Debt With Early Payment

  • Although the duration of a repayment plan differs between individual filers, the law requires that it last a minimum of three years. However, you can ask the bankruptcy trustee assigned to your case for permission to end your plan earlier than scheduled. Generally, if you're willing to pay off all of the original debt, the trustee is likely to allow early payoff of your Chapter 13 plan. In other words, you must pay 100 percent of what you originally owed to each creditor, not just the amount you agreed to pay through your repayment plan -- which is typically less.

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