Chapter 13 bankruptcy can give you much needed debt relief. It can establish a payment plan that will allow you to keep your home, car, and other personal property. However, the Chapter 13 bankruptcy process can be extensive. It can take years to complete, and some people want to get it over with sooner rather than later.

How Is a Chapter 13 Payment Plan Determined?

A Chapter 13 payment plan is established by reviewing your current finances and determining how much you can afford to repay. Your debt payments will be combined into one monthly payment that you will pay instead of paying creditors separately.

A Chapter 13 payment plan timeline will be determined based on your ability to pay. You must have enough income after your expenses have been considered that will allow you to repay your debts. If you do not have enough extra income, you should consider Chapter 7 bankruptcy instead.

If you make a Chapter 13 bankruptcy plan based on current finances and your circumstances change, you may be able to modify your payment plan. You may be able to convert your case to a Chapter 7, or you might opt to pay off a Chapter 13 bankruptcy early. There are multiple options depending on the facts of your case.

How Does Chapter 13 Bankruptcy Handle Debt?

Chapter 13 bankruptcy, often called “reorganization bankruptcy,” allows you to establish a payment plan that includes all your debts. Even those that cannot be discharged, or cleared, can be included in a payment plan. This gives you extra time to pay things off.

If you are trying to stay in your home or keep your car, Chapter 13 is likely your best option. Your past due payments can be included in your debt repayment plan. You will also have to continue making on time payments to keep that property.

How Long Does Chapter 13 Take?

Chapter 13 involves a three- to five-year payment plan. Once that is completed, the remaining debts may be cleared or discharged without repayment in some circumstances.

It’s also important to know that Chapter 13 will remain on your credit report for up to seven years. While you may consider this to be a black mark on your credit report, it’s probably a better situation than having multiple past due debts listed on your credit report.

Why Do People Want to Pay Chapter 13 Bankruptcy Early?

For some people three to five years is too long. They want to pay the Chapter 13 bankruptcy off early.

Your bankruptcy is not “final” until you reach the end of your repayment plan. There are multiple reasons people might want to pay it off early, including trying to buy a house or get other credit that is limited if you are in the bankruptcy process.

If your financial situation changes, you might also decide to pay off your bankruptcy early. For example, if you inherit a lump sum amount of money that would take care of your debts or if you get a new job that pays well, you might want to repay your Chapter 13 early.

How to Pay Off a Chapter 13 Payment Plan Early

There are two ways to eliminate your Chapter 13 payment plan early, depending on your circumstances. You may either:

  • Repay 100% of the allowed claims filed in your case; or
  • Qualify for a hardship discharge.

In either event, you will have a clean slate and your payment plan will end.

If your financial situation has greatly improved or you have come into a lump sum of money, then you may be able to repay your debts early. You can accelerate your payment plan by making payments in advance. Once you make all necessary payments, the court will end your bankruptcy case and it will be final.

If you cannot repay all the debt right away, you may still be able to modify your payment plan to accelerate it. For example, if you had a five-year payment plan, you may be able to adjust that to a three-year payment plan if you have more money available monthly.

However, if your financial situation has gotten worse, you may qualify for a hardship discharge of your remaining debts. You must show that you have made all possible efforts to make payments. The court will scrutinize your finances. You may be able to switch to Chapter 7 or the court may simply discharge your remaining debt.

How Can a Bankruptcy Attorney Help Me Pay Off My Debt Faster?

By working with a bankruptcy lawyer, you can evaluate your repayment plan and determine if it is still working for you. If you are able to pay off your Chapter 13 bankruptcy faster, your attorney can approach the court and help you navigate the process to finalize your bankruptcy as soon as possible.

Contact Clark & Washington LLC For Help

Clark & Washington has a team of bankruptcy lawyers who can help you. We understand bankruptcy laws, and we know that you want to get out from under the burden as soon as possible. We will evaluate your case and provide honest legal advice about how to move forward with paying off your Chapter 13 bankruptcy early.

Call us today at (865) 689-1777 to discuss your case with one of our bankruptcy attorneys.