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Can I payoff my chapter 13 bankruptcy off early ?

Eatonville, WA |

I have someone who would like to purchase my truck for $ 8500 . The balance on my bankruptcy is $ 8300 . Would this payoff my bankruptcy ? Truck is included in the bankruptcy .

What is required of me when I finish paying off my bankruptcy in the way of paperwork, what documents, etc.

Attorney Answers 7

  1. First of all, you will likely need to file a Motion for Authority to sell the vehicle and provide notice to the Court Trustee, and the car creditor. If your plan is a 100% plan, meaning you are paying all creditors back in the bankruptcy, then it is possible to pay off your plan early by paying the full balanced owed in the plan.

    However, if your plan is not 100%, then the Trustee may want you to use the extra income that you will now have (since you will no longer be repaying a car) to pay some percentage back all of your other creditors.

    You need to sit down and consult with your attorney on how exactly selling the vehicle will effect your bankruptcy case. Good luck.

    I practice law in California and do not practice law in your state. This answer is for informational purposes only. This answer does not constitute legal advice, create an attorney-client relationship, or constitute attorney advertising.

  2. I agree that you may need to file a Motion for Authority to sell your truck, but you need to review your approved Ch13 plan to see if the property of the estate revested in the debtor upon confirmation. If it did, you can sell the truck without court approval, if it did not, then you must have court approval. Whether the $8500 is sufficient to pay off your bk, no one here can possible know. Have your attorney, assuming you have one, request a payoff from the trustee.

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  3. It used to be possible to do exactly what you want to do with no problem. Unfortunately, these days, many (if not most) Trustees treat attempts to pay off a less-than-100% Plan early as an excuse for increasing the percentage to the unsecured creditors (depending on your applicable commitment period, etc.). Sometimes it's best to sell the truck, put the money in an interest-bearing account, and use that account to finish making your payments. If the Plan was for less than 5 yrs and you've already paid nearly 3 yrs, you could probably get away with making extra payments to get out a little sooner.

  4. You also didn't mention whether the vehicle was exempt, or otherwise paid for through your plan.

    Most courts and trustees are be more amenable to allowing are more amenable to early payoffs from such funds (as opposed to increased income).

  5. It is sometimes possible to pay off a Chapter 13 early. You should contact your Chapter 13 attorney and see if it is possible in your case. If you do not have an attorney I'd be happy to look into it for you.
    Good luck.

  6. Yes. You can payoff your bankruptcy early without any additional fees outside of the Trustee's fees. The issue however, is that you may need to get the Trustee's approval for liquidation of the vehicle. I would contact your bankruptcy attorney for further assistance.

    The Law Office of Tuella O. Sykes, PLLC 600 1st Avenue, Suite 307 Seattle, WA 98104 Phone: 206-721-0086 Fax: 206-721-0087 Website: Call and mention this post for a free 20 minute consultation

  7. Well, I wish I could say the answer is easy. From the scant facts that you provided, it is not possible to say if paying $8,300 is a good idea or not. Example #1 - it would be a total rip off to pay $8,300 to terminate your plan - E.g. If you are a lower income person and your plan is at say month 35 and you owe nothing on secured debt or priority debt (like taxes or back child support), then you might be eligible to just make one more small plan payment and end your plan next month - thus avoid having to sell your truck! Example #2 - here it might be a good idea - E.g. if you are a lower income person and you have passed month 36 and the $8,300 you owe on your plan is pretty much all slated to go to pay of the remaining debt on the truck, then I suppose that you could prudently pursue the motion to allow sale of the truck and then payoff of the plan with the proceeds. I wish I had a few more facts from you to help nail down what you should do.

    By the way, where is your Chapter 13 attorney in all of this? While is a great place to get some help from some pretty smart people, really your original Chapter 13 attorney should be involved in helping you. If you are posting here then I assume your Chapter 13 attorney is out of business or maybe just nonresponsive? Generally, you are supposed to be able to rely upon your Chapter 13 attorney to advise you even years on into your Chapter 13 bankruptcy filing - assuming that the person who filed it for you had/has a clue about what he or she was doing. With the "bankruptcy boom" of 2008-2011 I have seen some pretty clueless bankruptcy attorneys running around out there .... even some with great big TV and bus ads! You can always check out our website at Over the past five or six years, very few attorneys have filed as many or more South Puget Sound Chapter 13 cases as has my firm. We do lots of them! Really, you need to talk to a lawyer who understands Chapter 13 at a deeper level to figure out what you should do. Be cautious of just barging on ahead with what you are doing - and remember, while the Chapter 13 office helpers might seem friendly and helpful, they are not in the business of telling you what is "best" for you to do - just what you "could" do. Best wishes in your quest, James H. MaGee, Atty Offices in Puyallup, Tacoma, Renton and Olympia 253 383 1001