Is Early Pay Off for Chapter 13 Bankruptcy Possible?

 Posted on January 15, 2025 in Chapter 13 Bankruptcy

In Chapter 13 bankruptcy, debts are discharged after you pay off your bankruptcy plan. In most cases, debtors in Chapter 13 have three to five years to pay off the plan, after which time the Chapter 13 discharge occurs.

What happens if a debtor wants to pay off the Chapter 13 early? Can they do that? Although paying off Chapter 13 early is possible, it is not easy. Contact an experienced Houston, TX Chapter 13 bankruptcy attorney to discuss the possibility of obtaining an early discharge in Chapter 13.  

How Does Chapter 13 Bankruptcy Work?

When you file Chapter 13 bankruptcy, you keep all your property and make a repayment plan to pay off part or all of your debt with monthly payments during the payment plan period, which lasts from three to five years.

Why Is It Generally Not Possible to Pay Off Chapter 13 Early?

Usually, it is not possible to pay off your Chapter 13 plan early. When you agree to pay off the plan you do not agree to pay off the plan amount but rather all of your disposable income during the course of the plan. Your disposable income is the money you have left after deducting expenses and payments to secured creditors. If your disposable income increases, that additional amount is meant to go to the unsecured creditors, not to pay off the plan early.

When Can You Pay Off Chapter 13 Early?

Although it is generally not possible to pay off a Chapter 13 debt early, there are two main exceptions to this rule:

You Have Paid Off Your Debts In Full

If you have paid off the entirety of the debts you owe your creditors, you will be allowed to end the plan early as you have made your creditors whole.

If You Request an Early Discharge Due to Hardship 

If you can prove that you cannot continue to make payments because of a financial hardship caused by circumstances outside of your control such as a disability or change in your income, you may be able to receive an early discharge due to financial hardship.

Contact a Houston, TX Chapter 13 Bankruptcy Attorney 

If your financial circumstances have changed for the better or the worse and you want to pay off Chapter 13 early, the experienced Conroe, TX bankruptcy attorney can advise you on whether doing so is possible in your case. At The Fealy Law Firm, PC, Attorney Vicky Fealy is here to help you through hard financial times and guide you through the bankruptcy process. Call the law firm at 713-526-5220 for a complimentary consultation.