Chapter 13 plans may last from 36-60 months. This is a long period of time to be in an active bankruptcy, and it is not uncommon for clients to experience changes in their income over the duration of their plan.
I have had many clients inquire about the pros and cons of exiting a chapter 13 plan early. It may be in your best interest, but there are several factors to consider before you make such a decision.
You must be aware that if you have the means to pay off a plan early, you will need to clarify where you got the money to do so. To get out of the plan early, you have to file a motion with the court and serve it on all creditors. That is the easy part.
Issues may arise if any creditors object, which is certainly possible. If they object, the argument against early payoff would likely be that the creditors will lose the benefit of any potential increase in your disposable income over the life of your Chapter 13 plan. In other words, if you are allowed to complete the plan early, your creditors could lose the benefit of an increased plan payment if you have received a pay raise, bonus, inheritance, or decrease in expenses.
The creditors or the trustee may argue that these funds are property of your bankruptcy estate which should be used to increase your payment to creditors and not to shorten the duration of your Chapter 13.
This scenario is more likely to occur in plans where unsecured creditors are receiving only a nominal dividend. In cases where unsecured creditors are being paid back in full, it is not likely to be an issue.
If you have experienced fluctuations in your income or expenses during the life of your plan, you should contact your attorney to review the particulars of your circumstances.