Chapter 7 Success Lawyers Chicago - Paying Off a Chapter 13 Bankruptcy Case Early

Paying Off a Chapter 13 Bankruptcy Case Early

Chapter 13 bankruptcy pay-offs prior to the scheduled pay-off month can cause some concern among Chapter 13 trustees.  The thinking is that the debtor may have had the funds and yet, may not have disclosed the funds.  Or, more likely, the debtor had a family member or friend agree to work an early payment arrangement prior to the case actually being filed.  This would not be a problem if the case was paying 100% to all creditors.  The issue arises in cases where the debtor is paying less than 100% to creditors as in the case of  a 10% plan. 
If the trustee believes that the case was set-up from the start, he can bring a motion to dismiss without a discharge or have the case continued until the creditors are paid in full.
In a recent case in the Northern District of Illinois, the trustee is seeking information as to where the debtor received funds to pay the case off within one year or filing.  In this particular case, the funds were obtained from the Father of the debtor, thus, there was no fraud.  The Father had to take a line of credit or equity loan out of his real property.
By satisfying the trustee’s request, the debtor should receive her discharge in the ordinary course while paying creditors less than 100% as per her plan filed with the court and confirmed by the court.

Back to Articles