Chapter 13 Bankruptcy
Chapter 13 Bankruptcy Lawyer
Living with debt can be extremely stressful, not to mention stigmatizing. If you have a steady source of income and are ready to regain control of your finances, Chapter 13 bankruptcy may be the best solution for you.
An experienced Chapter 13 bankruptcy lawyer can help steer you in the right direction. At Nevada Bankruptcy Attorneys, we’ve spent the last several decades practicing bankruptcy law in Nevada, and we’ve successfully helped thousands of folks just like you navigate their bankruptcy cases in Las Vegas and beyond.
Not sure if Chapter 13 bankruptcy is for you? Here’s everything you need to know.
What is Chapter 13 Bankruptcy?
If you’re seeking debt relief and have a steady income, Chapter 13 bankruptcy can allow you to repay all or part of your debts. Under this Chapter, debtors may propose a repayment plan, which is also known as a “wage earner’s plan.” This plan allows debtors to break up their debt into monthly payments over a certain period of time, usually three to five years.
If you have more debt than you can pay off in a reasonable amount of time, a Chapter 13 bankruptcy lawyer can help you get the breathing room you need to improve your financial situation and live debt free.
A Chapter 13 bankruptcy can allow you to:
- Keep valuable non-exempt property.
- Stop interest from accruing on your tax debt.
- Make missed car or mortgage payments.
- Pay tax debts.
- Prevent foreclosure proceedings on your house.
In Nevada, there are certain types of property that you can protect from creditors when you file bankruptcy, meaning you can keep the exempted property. Exemptions in Nevada include:
- Personal property
- Public benefits
- Tools of trade
- Wild card
If you properly use your exemptions and meet the residency requirement of 730 days (or two years), you can keep most, if not all, of your possessions despite filing for bankruptcy. That way, you can get a fresh start without taking a loss.
How Chapter 13 Bankruptcy Works
If your Chapter 13 bankruptcy filing gets approved, you’ll be able to make your debt payments more manageable. To come up with a reasonable repayment plan, you’ll need to look at your disposable income and determine how much you can pay toward your debt each month.
This involves taking your monthly expenses into account, along with your secured debts such as car and mortgage payments. After making those calculations, you can determine your disposable income, which you’ll put towards paying some of your unsecured debts.
Upon successfully completing an approved plan, you can discharge the rest of your debts and start with a clean slate.
By filing for Chapter 13 bankruptcy, you can:
- Protect yourself from debt collector and creditor harassment with automatic stays.
- Keep your assets, such as your home and vehicle, even if you’re behind on your payments (unlike with Chapter 7).
- Avoid paying interest.
- Achieve a zero balance on your accounts.
Different states, of course, have different bankruptcy laws.
What Chapter 13 Proceedings Look Like in Nevada
After finding a bankruptcy lawyer, you’ll generally need to pay a filing fee to the Nevada bankruptcy court, which is $313 (a $235 filing fee plus a $78 administrative fee). Your filing should include the following information:
- Your income.
- A list of your properties and an accounting of all contracts and leases in your name.
- A breakdown of your monthly living expenses.
- Tax information, including a copy of your most recent federal tax return and any unpaid taxes.
- A list of secured and unsecured creditors and the total amount of your claims.
Then, you must propose a repayment plan. The bankruptcy court will hold a hearing before a judge to determine if the plan is fair and meets the requirements of the bankruptcy code.
Upon plan approval, you must arrange to make up delinquent payments over time and work with a Chapter 13 trustee who will distribute those payments to your creditors. If you miss payments or make payments after the payment period, your Chapter 13 bankruptcy case could be dismissed and you could lose your assets.
For more information about Las Vegas Chapter 13 bankruptcy and Nevada bankruptcy law in general, click here.
Who Can Declare Chapter 13 Bankruptcy?
Only individuals and people filing as spouses can file for Chapter 13 bankruptcy—corporations and LLCs cannot. Those types of businesses must file for Chapter 11 bankruptcy instead.
Individuals and spouses must have the following qualifications to file under Chapter 13:
- You must have a regular income that is sufficient to cover the required monthly payment.
- Your unsecured debt must not exceed $419,275.
- Your secured debt must not exceed $1,257,850.
- You must be current on your taxes.
- You must not have filed for Chapter 13 bankruptcy in the past two years or Chapter 7 bankruptcy in the past four years.
- You must not have filed a bankruptcy petition in the previous 180 days that was dismissed for certain reasons, such as failing to appear or comply with court orders.
In Nevada and other states, you must also undergo a “means test.” Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), if your income is above Nevada’s median income, you can only file for Chapter 13 bankruptcy.
A bankruptcy lawyer can determine if you can file under Chapter 7 or if you’re required to file under Chapter 13 during your initial consultation.
The Difference Between Chapter 7 and Chapter 13 Bankruptcy
Chapter 7 and Chapter 13 of the U.S. Bankruptcy Code have quite a few differences. If you decide to file, you should understand the key differences between them.
Each chapter outlines a way for a debtor to take care of their debt. The choice to file one or the other determines whether a debtor will need to settle their debts using the property they own or follow a repayment plan.
Neither Chapter 7 nor Chapter 13 allow you to discharge certain debts, including child support, alimony, and certain taxes. However, they have more differences than similarities.
- Involves selling some or all of your property to pay off your debts. You might file Chapter 7 if you don’t own a home or have limited income.
- Allows your trustee to sell non-exempt property to settle your debts and doesn’t allow you to settle missed payments to avoid repossession or foreclosure.
- Typically takes 90 to 100 days to complete and can allow you to find debt relief faster.
- Can stay on your credit reports for up to 10 years from the date you file. While this doesn’t mean you can’t open a credit card or take out a mortgage again, future creditors may charge you higher interest rates and fees.
- Gives you a chance to keep your property if you successfully complete a court-approved repayment plan.
- Allows you to settle missed payments to avoid repossession or foreclosure.
- Typically takes three to five years to complete.
- Can stay on your credit reports for up to seven years from your filing date.
Let’s review the length of the Chapter 13 process in more detail.
How Long Does It Take to File Bankruptcy Chapter 13?
Filing Chapter 13 bankruptcy takes several months.
Before you file Chapter 13, you must participate in credit counseling and attend a class in financial management. Once you file a petition for Chapter 13 bankruptcy, you must file a repayment plan within two weeks and make your first payment within a month. Your case trustee will then call a meeting of creditors within three to seven weeks.
The court will hold a hearing within six weeks of your trustee’s meeting with your creditors and approve or deny your repayment plan. Upon approval, you’ll continue to make payments to your case trustee.
The entire process typically lasts three to five years, depending on the length of your payment plan and your income. Unfortunately, it can stay on your credit report for even longer.
How Long Does a Chapter 13 Bankruptcy Stay on Your Credit Report?
As stated above, a Chapter 13 bankruptcy can stay on your credit report for up to seven years from the date you filed the bankruptcy. Unfortunately, you cannot remove a bankruptcy case from your credit report.
While bankruptcy can have a significant impact on your credit file, its effects will not last forever. And in fact, filing Chapter 13 may do a lot less damage to your credit than failing to repay your debts.
How to File Chapter 13 Bankruptcy
If you decide to file, you should prepare for an extensive process and a lot of paperwork. A Chapter 13 bankruptcy lawyer can help you navigate it all, but here’s how it typically goes.
The first step to filing a Las Vegas Chapter 13 bankruptcy or other bankruptcy in Nevada is to gather all relevant documents. This includes:
- Credit reports from all three bureaus (Equifax, Experian, and TransUnion).
- Tax returns for the past four years.
- Proof of income for the last six months.
- Bank statements from the last three to six months.
- Recent mortgage statements and real estate tax bills.
- Recent retirement account or brokerage account statements.
- Appraisals of any real estate you own.
- Recent car loan statements.
Before you fill out any forms, create a list of your creditors and calculate how much you owe each of them. Include all of your debts, even if they’re not listed on your credit report.
The next step is to analyze your debt and divide it into two separate categories: secured debts and unsecured debts. Then, determine which debts take priority. Each of these factors will determine your repayment amount and the order in which your trustee will distribute your plan payments.
Then, create a budget by comparing your incoming to your total living expenses to see whether you have enough disposable income to start making monthly payments. If your steady income isn’t high enough, you won’t be able to proceed.
If a Chapter 13 payment plan is feasible, you can proceed by taking your first credit counseling course. After completing the course, you’ll receive a certificate of completion to include with your bankruptcy paperwork.
You can then fill out your bankruptcy forms and file a petition with the court. Then, send important financial documents to your trustee, including tax returns, pay stubs, and bank statements. Your trustee will compare the information in these documents against the information you provided in your bankruptcy forms to ensure accuracy.
About a month after filing your bankruptcy petition, you’ll meet with your trustee to make sure you filled out your bankruptcy forms correctly and proposed a feasible plan.
Then, you’ll attend a confirmation hearing where a judge will decide whether to approve your repayment plan. If the judge approves, you must agree to make your debt payments on time and go forward with your plan.
Hire a Chapter 13 Bankruptcy Lawyer
As you can see, bankruptcy proceedings are extremely complex. While it’s possible to navigate the process on your own, Chapter 13 bankruptcy lawyers who specialize in these types of proceedings can help.
Nevada Bankruptcy Attorneys can ensure you have a smooth bankruptcy proceeding and help you put your financial troubles behind you. Contact us today for a free, no-obligation consultation.