The biggest difference between Chapter 7 and Chapter 13 is that Chapter 13 allows the debtor to restructure the payment option after filing bankruptcy. This repayment structure is supposed to help the debtor in paying the debt gradually while they can keep their property. You have to pay for the next five years. But what if you don’t want to drag this any longer? You might wonder what if you want to pay the whole amount even before that. Connect with a Pittsburgh bankruptcy lawyer who will be able to explain the following information more elaborately.Why You Should Not Pay Chapter 13 Creditors in Advance
Mostly the assumption in a situation like this is that paying the Chapter 13 creditors in advance is a better option. The creditor gets the money. The debtor becomes free from any obligations and the case concludes sooner. So it is a good deal for everyone involved.
Though this is not an impossible thing, yet one has to know about the blocks that are there for early repayment.
First of all, it doesn’t depend on your discretion whether you want to make the repayment plan faster or not. You have to confirm your financial intention to your creditor and then seek approval from the bankruptcy court that is overseeing the case. To change your repayment plan, you need to wait for the court’s approval.
When the case is discharged, the court considers the debtor’s income and then decides the duration of the repayment plan. If your earning is more than the median family of your state, the time will be five years for the repayment plan. In case your earning is less, then you will have to pay for three years. This commitment period gets decided according to the 11 U.S.C. §1325 (Confirmation of Plan).
So, why you should not pay the creditors in advance? Hypothetically, your creditors are entitled to the disposable income that you have. This means, after paying the bills and daily expenses, the rest of the income will be paid to the creditors. In case, you have got a raise or an inheritance or any kind of financial benefit that has helped you get a lot of amounts if you make an early payment that will cost your creditors. In a situation like this, it is more likely that your creditor will attempt to increase the payment. In fact, if you are requesting an alteration to shorten the payment plan, it will work against you. You will have to pay higher without changing other variables.
However, if you are looking for a way to modify the plan, it is better that you talk to a Pittsburgh bankruptcy lawyer who can help you effectively.Modifying Your Bankruptcy Repayment Plan
Even though altering the plan is not a good option, yet you need to understand that you can do it by some other means. You can ask your Pittsburgh bankruptcy lawyer to obtain a Chapter 13 moratorium which will help you get a break from the payment for 90 days. It is a helpful way for you if you are going through some problem like an injury, temporary job loss or pay-cut, or any temporary changes in your financial circumstances. However, the moratorium will not change the final date of payment.
If there is a serious problem arises that will have long-term implications on your financial stability, you can modify your plan. The court might modify chapter 13 permanently. However, you still have to take care of your priority debts. Or depending on your circumstances, you can get hardship discharge.
For any modification, it is better that you come to us at Pittsburgh Bankruptcy Law Group and let our Pittsburgh bankruptcy lawyer help you.
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