If the family’s income is below the median, a Chapter 13 usually lasts three years. At the creditors’ meeting, the trustee and debtor usually set up a repayment schedule which lasts thirty-six or sixty months. You may, however, be asking, Can you pay off Chapter 13 bankruptcy early?

In a nutshell, most people file bankruptcy because they are experiencing severe financial stress. This federal debt relief program halts stressful things like repossession and foreclosure. Most people want to pay off their debts as quickly as possible in order to eliminate this stress. That could mean accelerated payments and the possibility of an early discharge.

Some debtors are on the opposite end of the spectrum. A financial storm, such as a sudden serious illness or unexpected job loss, makes it impossible for them to pay off everything they had planned to pay off. An early discharge might be possible in these situations as well.

In either case, creditors almost always object to the early discharge request. Since these creditors have a small army of lawyers representing them, you need a tenacious Athens bankruptcy lawyer to level the playing field and stand up for your legal and financial rights.

Is Bankruptcy Early Discharge a Good Idea in Athens, Georgia?

Just because you can do a thing, it does not necessarily follow that you must do that thing. Early Chapter 13 discharge, if it is available, is usually, but not always, the best option for your family.

The end of Chapter 13 means no more monthly debt consolidation payments and no more court supervision. Additionally, ending Chapter 13 early shows potential lenders that you have a degree of financial sense and discipline that other debtors lack. Finally, it is much easier to borrow money responsibly and rebuild credit after Chapter 13 ends.

On the flip side, there is the let-sleeping-dogs-lie angle. Most creditors accept most bankruptcy filings. But when debtors try to end their commitments early, even if they have a valid reason for doing so, many creditors object. So, unless you have a strong Athens bankruptcy attorney to stand up for you, asking the judge to end bankruptcy early might cause more problems than it solves.

Pay All Allowed Claims

While they are in bankruptcy, many people inherit money or receive other financial windfalls. Still other people get promoted or otherwise experience dramatic income increases. If the debtor pays all allowed claims, the judge could allow the debtor to exit bankruptcy early. Allowed claims are:

• Administrative claims, like the trustee’s fee
• Secured claims, such as past-due mortgage debt and
• Priority unsecured claims, like past-due child support payments

Unsecured creditors, like credit card companies, are not entitled to full repayment. However, if the debtor is able to retire allowed claims, many unsecured creditors ask the judge to adjust the payment schedule to give them more money.

Assume Bill has $36,000 in allowed claims, so his Chapter 13 payment is $1,000 per month for thirty-six months. Bill also has substantial credit card debt which is not included in the repayment plan. Halfway through the bankruptcy, his Uncle Moneybags dies and leaves Bill $15,000. If Bill tries to pay off the plan early, the credit card company will most likely try to force Bill to remain in bankruptcy and pay down his credit card debt.

Typically, objections like this one are bluffs. But unless your Athens bankruptcy lawyer is confident and experienced, these bluffs are usually successful.

What Is a Bankruptcy Hardship Discharge?

Now assume Bill has a stroke of bad fortune, instead of a stroke of good fortune, halfway through his bankruptcy. Perhaps he loses his job or becomes seriously ill. Bill is entitled to a hardship discharge if:

• His creditors have received what they would have received if Bill filed a Chapter 7 (which is usually almost nothing)
• He had no control over his changed circumstances
• His situation will probably not get better and
• He does not have enough disposable income to modify the plan

The second and third bullet points are usually the hardest prongs for Bill, or anyone else, to prove. Events like a job loss could be outside the person’s control, or they could be at least partially due to a poor attendance record or some other fault. Additionally, people’s health often improves, and they are usually able to find other jobs.

Once again, skilled advocacy from an Athens bankruptcy attorney could be the difference between a hardship discharge and being trapped by a difficult repayment plan.

Speak to a Competent Athens Bankruptcy Lawyer in Athens, GA

If you’re asking, Can you pay off Chapter 13 bankruptcy early? The answer is yes, you can pay off Chapter 13 bankruptcy early in some cases. For a free consultation with an experienced Athens bankruptcy attorney, contact Morgan & Morgan, Attorneys at Law, P.C. at (706) 843-2905. Virtual, after-hours, and home visits are available.

Lee Paulk Morgan

Lee Paulk Morgan

With more than 41 years of experience in the areas of Bankruptcy, Disability, and Workers’ Compensation, Lee Paulk Morgan is one of the most respected Bankruptcy and Disability attorneys in Athens, Georgia. His tireless dedication to serving clients has gained him the reputation of a premier attorney in his areas of practice, as well as the trust and respect of other legal experts, who often refer clients to him.