Can I End My Iowa Chapter 13 Bankruptcy Early?
Filing for Chapter 13 bankruptcy in Iowa is a commitment: for three to five years, you are agreeing to pay the local bankruptcy court trustee your “disposable income” (as that amount is calculated) in order that such funds can be used to pay your debts and obligations. Depending on your spending habits and lifestyle expectations, making a Chapter 13 bankruptcy plan work can require a considerable amount of self-discipline and restraint.
Terminating Your Chapter 13 Bankruptcy Early
For these reasons, some filers of Chapter 13 bankruptcy may wish to end their bankruptcy early and receive a discharge of their eligible debts. However appealing such a plan may sound at first, there are several reasons why you cannot – or maybe should not – follow such a course of action:
- Your plan must last a minimum of three years: Your Chapter 13 repayment plan must last for a minimum of three years. Even if you pay the entire amount you promise to pay under the terms of your plan before 36 months have elapsed, the court will not grant your discharge prior to the 36-month mark.
- You must make all of your payments (or convert to a Chapter 7): Not only must you wait for at least 36 months before petitioning for an early termination of your Chapter 13 plan, you must either have made all of the payments you promised to make when you initially filed for bankruptcy or you must be eligible to convert your plan into a Chapter 7 bankruptcy (which results in a discharge of your eligible debts without the requirement that you make payments toward a payment plan).
- You must be willing to have the automatic stay lifted: In a Chapter 13 bankruptcy, there are certain debts (such as court judgments, student loans, and child support obligations) that are not dischargeable. However, because of the bankruptcy court’s automatic stay, collection efforts on these debts are usually suspended during the pendency of the bankruptcy. Once you have successfully petitioned the court for an early discharge from your bankruptcy, the automatic stay will be lifted and collection activities on these undischarged debts will resume in earnest. You may find it more beneficial to continue with your plan for a longer period of time to enjoy the reprieve from collection activities that the automatic stay provides.
How an Iowa Bankruptcy Attorney Can Help You
Whether you are contemplating filing for bankruptcy in Iowa or you have already filed and need assistance in determining how to best proceed now that your bankruptcy petition has been filed, the Noyes Law Office, P.C. is available to assist you in resolving your questions, concerns, and legal needs. We will evaluate your financial situation and progress through your Chapter 13 plan and provide you experienced, knowledgeable, and personalized advice as to whether terminating your Chapter 13 bankruptcy early makes sense for you. Call our Fairfield office at (641) 472-3236 or contact us online to discuss your bankruptcy issues.