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Can I Pay Off a Chapter 13 Bankruptcy Early in Central New York and the North Country?

Struggling with large amounts of debt can cause significant amounts of stress and anxiety. However, it’s essential to recognize that you are far from alone in this situation. Many people are experiencing financial hardship, much of which has been exacerbated by the global pandemic. As you explore your debt relief options in Central New York and the North Country, you may want to know more about the benefits of pursuing a Chapter 13 bankruptcy. This type of bankruptcy allows you to establish a repayment plan (which typically lasts between three and five years), during which you gradually repay a percent of your unsecured debt. Let’s take a look at how Chapter 13 bankruptcy works and address some common questions about this process.

Understanding How Chapter 13 Bankruptcy Works

Also called a wage earner’s plan, Chapter 13 bankruptcy allows individuals facing financial difficulties who have a regular source of income to develop a debt repayment plan. The individual establishes a repayment plan lasting between three to five years, during which they make regular payments to a trustee (either directly or through payroll deductions). Once the repayment period ends, the court will discharge (wipe away) all remaining qualifying debts. Chapter 13 bankruptcy relief also provides debtors with the opportunity to save their homes from foreclosure, repay income taxes, or reduce interest on auto loans.

Common Questions About the Repayment Plan

Many people wonder how the repayment plan works. Once the repayment plan is established, the court will appoint a trustee to administer and evaluate the case, collect the monthly payments, and distribute funds to creditors. While some debtors may think it’s advantageous to pay off the bankruptcy plan before the three to five-year period ends, doing so offers few advantages (and, in some cases, it can create additional issues). A chapter 13 repayment plan is a set monthly payment for a set number of months. There is not a principal balance you are paying down. If you pay extra, your unsecured creditors will end up receiving more money, but you would not end the repayment plan early. During the repayment plan, you will want to set money aside in savings to cover future expenses and build a nest egg. If you find that you can afford to pay more than your set repayment plan payment, it is possible in some situations to reduce the time that you are in bankruptcy. On the flip side, if you find that you can not afford the set repayment plan payment, it may be possible to reduce your payment (would need to show that there has been a permanent reduction in income and/or increase in expenses).

Discuss Your Options With a Compassionate Central New York & North Country Attorney

If you are struggling with debt, you are not alone. Instead of suffering in silence, reach out to a compassionate Central New York and North Country bankruptcy attorney to discuss your options for obtaining the fresh start you need. Together, you can assess your situation and determine the most strategic path forward. It’s time to take control of your financial future once again, so contact a dedicated bankruptcy lawyer today to get started.


Call Grady BK, PLLC, today at (315) 299-9005 to schedule an appointment with a compassionate and trusted Central New York and North Country bankruptcy attorney.