Chapter 13 plans are typically from 3-5 years. In Florida, which is bound by decisions of the 11th Circuit Court of Appeals, a debtor who is above median income on the means test must be in a 5 year plan. In re Tennyson. 611 F. 3d 873(11th Cir. 2010). The idea under BAPCPA is that the applicable commitment period for an above median income debtor is 5 years during which time the debtor must pay his disposable income.
What if the debtor is able to pay off the chapter 13 plan early? This could not be from increased income, because the debtor would have greater disposable income and would be able to increase the chapter 13 payments. But what if a family member could make a gift, or the debtor could fund the plan from exempt funds such as an IRA?
In the past, I have obtained early payoffs with the consent of Robin Weiner, Chapter 13 Trustee for Broward and Palm Beach counties in Florida. But Tennyson has caused a concern for the trustee that a chapter 13 case should perhaps remain open for the required term because the debtor could have additional income.
A recent case from the Middle District of Florida expressly authorized the early payoff of a chapter 13 plan when a motion was filed with clear notice to the creditors. In re Smith, 449 BR 817(Bankr. M. D. FL June 6, 2011). The court examined the Tennyson case and concluded it did not prevent an early payoff.
As a Fort Lauderdale bankruptcy attorney, I recognize that the early completion of a chapter 13 bankruptcy is extremely beneficial to clients who are able to obtain an independent source of funds to complete plan payments.