Legal Question in Bankruptcy in Maryland

Early payoff with IRA

I am in chapter 13 bankruptcy and have made payment regularly for 2 years now and have 3 years remaining. My Finances are still challanged, and I would like to pay off my minimum payback on the bankrupcty to avoid future problems making payments.

Do you have to get permision to pay off a chapter 13 bankruptcy early and are there any concerns for doing so.

I would like to use funds from my roth IRA to do this.

Other than IRA regulations are there anything to be concerned about.

Are there any legal motions that ''have to be'' done.

Thank you


Asked on 3/29/04, 9:39 am

1 Answer from Attorneys
Carolyn Gilden Krohn Law Offices of Carolyn Gilden Krohn

Re: Early payoff with IRA

It would be different if you were refinancing a home or other property, but because you will be using funds from your IRA, which is "exempt" property, then you can use the funds to pay off your plan without permission of the bankruptcy court. You must first write to your trustee and request a payoff from them. They will then do an audit of your file and let you know how much it will be. I know of no penalties for doing this, other than the penalty for early withdrawal from your IRA. Make sure your trustee notifies the bankruptcy court of the completion of the plan once it has been paid in full.

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Answered on 3/29/04, 9:11 pm


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