Legal Question in Bankruptcy in New Jersey

Paying off Chapter 13 early

I started a chaper 13 in 2004 and was wondering if there is a penality for paying off a chpter 13 early? I need to refinance my house and was wondering if I can use money from refinancing my home to payoff my chapter 13 before my 3 years are up.


Asked on 1/07/05, 10:43 am

3 Answers from Attorneys
Stuart G. Brecher Law Offices of Stuart G. Brecher, LLC

Re: Paying off Chapter 13 early

Yes, you may satisfy your chapter 13 plan early by refinancing. I have done just that with chapter 13 clients of mine, and it makes good sense given recent favorable refi. rates.

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Answered on 1/07/05, 1:56 pm
Stuart G. Brecher Law Offices of Stuart G. Brecher, LLC

Re: Paying off Chapter 13 early

By the way, there is no penalty for paying chapter 13 plan obligations early.

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Answered on 1/07/05, 6:33 pm
John Corbett Corbett Law Firm LLC

Re: Paying off Chapter 13 early

You may pay off the Chapter 13 early without having any inherent adverse effects on your bankruptcy. However, I would concern me somewhat that the assets used for the early payments were not disclosed in your petition. If there is any possibility of this, you should have your petition, its supporting schedules, and the Chapter 13 plan reviewed to make sure that there is no fraud being committed on the unsecured creditors. If the opportunity to pay early arises from some recent good fortune or just from the current re-fi market, you should be able to pay early without any problem.

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Answered on 1/07/05, 11:15 pm


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