A request for an early payoff can be tricky. The amount you’re expected to pay can change throughout your repayment period. For instance, if your income increases but your expenses stay the same, your disposable income—and your plan payment—will increase. You have an obligation to report any increase in income to the bankruptcy trustee.
Creditors will lose the benefit of any future increase in your disposable income from a pay raise, bonus, inheritance, and the like, or a decrease in expenses over the life of your Chapter 13 plan. If the court agrees, the court will deny the early payoff and likely require you to increase your payments to reflect your additional income.
Depending on your particular circumstances, a request for an early payoff could result in the trustee seeking a higher repayment amount. We certainly can ask the trustee for a payoff amount; however, it is very possible that the figure she gives you will be a repayment amount of 100% to your creditors who filed claims.
If you would like to ask for a payoff amount from the trustee, she or he requires the following items be provided with the request:
- 1. A written description of the source of funds to pay off the bankruptcy.
- 2. If the source of funds is a gift, a notarized affidavit of support from the individual providing the gift.
- 3. A copy of your most recently filed tax return.
