Many debtors in Chapter 13 bankruptcy are eager to get the process done and over with. That leads them to consider their options, such as paying off their Chapter 13 bankruptcy plan early. Although a debtor can technically pay off their Chapter 13 bankruptcy plan early, the real question is…who exactly does that benefit? Filing Chapter 13 bankruptcy can be tricky enough, but paying off the plan early just may put the debtor under the scrutiny of the bankruptcy trustee. If a creditor notices that a debtor has paid off the Chapter 13 bankruptcy early, he/she may ask the bankruptcy trustee to consider the extra funds income. What this means is that the creditor wants the bankruptcy trustee to recognize that the debtor has "extra cash" lying around and can now pay more to the creditors. When someone files for Chapter 13 bankruptcy, the plan allows them to pay the creditors pennies on the dollar; but this is only because of the debtor’s income. If the debtor’s income increases, the bankruptcy trustee may feel justified in increasing the amount of money the debtor must pay the creditors each month.
The bottom line is that if you have a Chapter 13 bankruptcy repayment plan, stick with the program. Use all of the time you have available to repay your creditors and don’t cause the bankruptcy trustee and creditors to become suspicious by paying off your plan early.