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Early discharge from Ch13

Member

Early discharge from Ch13

Hi,
I'm about 1 year into a 60 ch13 bankruptcy plan. Nearly 100% of my debt is student loans. I entered ch13 to avoid the consequences of a USDA mortgage liquidation. My student loans are ~40k. When interviewing attorneys to handle my chapter 13, one attorney told me that they'd I would be able enter ch13 just long enough to surrender my USDA backed mortgage, this attorney also told me I wouldn't qualify for a chapter 7. I ended up hiring an attorney who told me they think I might be able to qualify for a ch7. Shortly into the process my chapter 7 was rejected and I was forced into a 13 due to my income. I asked my current attorney about the possibility of ending my ch13 early to which the response was "paying it off early". A quick search shows quite a bit of confusion on this. Some seems to think I'd qualify for a discharge since my student debt is not dischargable and would still be mine to pay.

Can anyone share a second opinion?

Thanks.

Starting Score: 524
Current Score: 524
Goal Score: 700


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4 REPLIES
Valued Contributor

Re: Early discharge from Ch13

Are you just trying to walk away from house?  If so ask the lender if they will let you dil or short sale? These won't hurt as hard as a foreclosure but still hurt. Usually you need loss of income to qualify or other major event.  A straight foreclosure  hurts both credit worse and your mind.  Most banks really don't want the house they will try to work with you. 

Message 2 of 5
Contributor

Re: Early discharge from Ch13


hd_apk wrote:
Hi,
I'm about 1 year into a 60 ch13 bankruptcy plan. Nearly 100% of my debt is student loans. I entered ch13 to avoid the consequences of a USDA mortgage liquidation. My student loans are ~40k. When interviewing attorneys to handle my chapter 13, one attorney told me that they'd I would be able enter ch13 just long enough to surrender my USDA backed mortgage, this attorney also told me I wouldn't qualify for a chapter 7. I ended up hiring an attorney who told me they think I might be able to qualify for a ch7. Shortly into the process my chapter 7 was rejected and I was forced into a 13 due to my income. I asked my current attorney about the possibility of ending my ch13 early to which the response was "paying it off early". A quick search shows quite a bit of confusion on this. Some seems to think I'd qualify for a discharge since my student debt is not dischargable and would still be mine to pay.

Can anyone share a second opinion?

Thanks.

Are you doing a 100% payment plan in the Chapter 13 or is it less than what the creditors wants?

 

If it's 100% I believe you can pay it off early if you have the money.  If it's a percentage of what you owe you most likley will not be able to get a discharge early.  If you are able to pay that amount the trustee will think you have more money and could possibly ask for more each month.



Equifax - 644
TransUnion - 641
Experian - 639
Message 3 of 5
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Member

Re: Early discharge from Ch13

I'm paying 100%, and with that all being federal student loans I'd not be discharged from it. Im wondering if I can exit the BQ once my dischargable debt is payed. Thanks

Starting Score: 524
Current Score: 524
Goal Score: 700


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Message 4 of 5
Regular Contributor

Re: Early discharge from Ch13


hd_apk wrote:
I ended up hiring an attorney who told me they think I might be able to qualify for a ch7. Shortly into the process my chapter 7 was rejected and I was forced into a 13 due to my income. I asked my current attorney about the possibility of ending my ch13 early to which the response was "paying it off early". . . I'm paying 100%, and with that all being federal student loans I'd not be discharged from it. Im wondering if I can exit the BQ once my dischargable debt is payed.

I assume you were over median income and failed the means test. If so, your commitment period is 60 months and you cannot “complete” the Chapter 13 in less than 60 months unless you pay ALL allowed claims in full. It does not matter if that “allowed claim” is of the type that is “non dischargeable”.

 

Des.

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