Sometimes financial fortunes in Mississippi can change quickly. You have received a large inheritance, or maybe your boss has given you a robust holiday bonus and even a big raise. No matter the reason, if you are in the middle of a Chapter 13 bankruptcy and have received a big financial windfall, you may want to accelerate the bankruptcy process by paying off your debts early. This might seem like a wise move, but there are drawbacks.
Remember that your Chapter 13 bankruptcy comes with a payment schedule. If you elect to pay your debts early, you are changing that schedule, and your creditors might have issues with such a quick alteration. Also keep in mind that, as Bank rate explains, under Chapter 13, creditors may decide to allow some of your debt to be discharged at the end of the bankruptcy process. So if you are paying off only some of your debt, your creditors may insist that if you wish to pay off your bankruptcy early that you go ahead and pay the full debt amount.
Additionally, it is not clear that you can pay your debts off early even if you want to. You will have to check with your bankruptcy trustee on the matter. Your bankruptcy court might also not allow it, or if the court does permit it, the court will tack on the debt amount that would have been discharged at the end of the bankruptcy. So it is likely that paying your bankruptcy early might actually cost you more than if you opted to proceed with the agreed upon schedule.
Also consider that if you have grown your finances, you have money available for other payments that have nothing to do with your Chapter 13 bankruptcy. Furthermore, if you can make the scheduled Chapter 13 payments and have money left over, you could put that money away in savings. In the event you do have income problems in the future, you still have some cash to sustain future Chapter 13 payments.
Be aware that this article does not offer readers any legal advice. It is written to provide informative content on Chapter 13 bankruptcy.