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Chapter 13 when car loans are paid off??

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Pumpkin729

Junior Member
What is the name of your state? PA

Here's what went down at the confirmation of plan hearing.

The trustee was objecting the plan because of two reason...

1) Income tax refund

2) Repayment of 401K retirement loan. ( Trustee said hubby was paying himself back and that money needed to go to the creditors)

Ok... our lawyer was trying to work out a deal with the trustee w/o going in front of the judge. If hubby stopped paying the 401k retirement loan he would then be paying a 10% penalty for defaulting on the loan, plus owing the IRS about about 8,000 plus interest and late fees.

We were trying to avoid the tax penatlies on the retirement loan. We told our lawyer that in seven months the two car will be paid off. Can we continue paying what we are now and then do a step-up plan and give the trustee the two car payments. The lawyer went in and make a deal that we pay 150 more a month for 60 months and we get to keep the tax refunds and continue to pay the retirement loan. That would make us be paying back about 80% of what we owe to the creditors. So, we said what is going to happen in seven months when the cars are paid off, he said thats it you done....take that money and put it in a CD or something.
Sounds to good to be true! We get to save money in bank? I am concerned that the trustee is going to come after us if we don't turn over the car payments.

The main question we have is that we are in a 60 month plan. We do not want it to drag out that long. Our plan is paying back 80%. If we pay for 36 months and want to pay off early, do we have to pay 100% now? And if we have to now pay 100% for paying off early is the trustee's money included in the plan?

Example: 60 month plan

Owe creditors $40,000 paying 80% back $32,000
trustee's fee 10% 3,200

In that 60 month plan is the trustee's fee included in the 32,000 already?

If we pay off the BK after 36 months instead of 60, do we now have to pay 100% of the plan? And if thats the case is the trustee's fee included in the 100% plan?

We are kinda stuck here because we're afraid we'll be thrown out of BK if the trustee finds out about the car payments. We do plan on saving those car payments and paying off early but we don't want in the end the trustee to say that we were hiding money from him and throw us out of BK. What do you think we should do with the money once the cars are paid off?
 



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