Chapter 13 Bankruptcy
Chapter 13 Bankruptcy Attorney
If you’re looking for a way to regain control of your finances and you have a steady source of income, Chapter 13 bankruptcy may be the most optimal solution for you. We’ve spent the last several decades practicing bankruptcy law in Nevada, and we’ve successfully helped thousands of folks just like you navigate bankruptcy in Las Vegas and surrounding areas. Reach out to our experienced bankruptcy attorneys today to help you find the best solution for YOU. Call us for a free, no-obligation consultation. We’re here to help.
What is Chapter 13 Bankruptcy?
If you have a regular income, Chapter 13 bankruptcy allows you to repay all or part of your debts. Under this Chapter, you will propose a repayment plan—which will allow you to break up your debt into monthly payments—to your creditors over a certain period of time, usually three to five years.
If you find that you are in a considerable amount of debt—more than you can pay off in a reasonable amount of time—you can file a Chapter 13 to get the breathing room you need to regain your financial footing.
A Chapter 13 bankruptcy can do the following:
- Allow you to keep valuable non-exempt property
- Stop interest from accruing on your tax debt
- Makeup missed car or mortgage payments
- Pay tax debts
- Prevent a house foreclosure
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 truly achieve a fresh start after you file.
How Does Chapter 13 Bankruptcy Work in Nevada?
When you file a Chapter 13 bankruptcy petition and get approved, you will be able to make your debt payments more manageable based on your income. To come up with a reasonable repayment plan, you will need to look at your income and determine how much you can afford to pay towards your debt each month.
This involves taking your monthly expenses into account, along with your secured debts like your house and car payment. After making those calculations, you should be able to determine your disposable income, which you would put towards paying some of your unsecured debts. Upon successfully completing your repayment plan, you can discharge the rest of your debts with a clean slate.
By filing for Chapter 13 bankruptcy, you can…
- Protect yourself from harassment by debt collectors with automatic stays
- Avoid the need to sell your assets (unlike with Chapter 7)
- Avoid paying interest on your payments
- Keep your home and vehicle (even if you are behind on payments)
- Achieve a zero balance on your accounts
What the Chapter 13 Bankruptcy Process Looks Like
After finding a bankruptcy lawyer, you will generally need to pay a filing fee to the bankruptcy court, which is $313 ($235 filing fee + $78 administrative fee) in Nevada. Along with the filing fee, you will also need to include the following information:
- A list of creditors and the amount of your claims
- Your income
- A list of your properties and the 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
After filing bankruptcy, you must propose a repayment plan. Then, a bankruptcy judge will hold a hearing 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 the creditors. If you miss payments or even make late payments, this could lead to the dismissal of your Chapter 13 bankruptcy case, and you could lose your assets.
Who Can Declare Chapter 13 Bankruptcy?
Individuals and those filing as spouses can file for Chapter 13 bankruptcy. On the other hand, businesses that are corporations and LLC companies are not eligible for Chapter 13. Instead, these parties must file for Chapter 11 bankruptcy.
Other qualifications you must meet in order to file Chapter 13 include:
- You must have a regular income that is sufficient to cover the required monthly payment.
- Your unsecured debt must not be more than $419,275, and your secured debt must not exceed $1,257,850.
- You must be current on tax filings.
- You must not have filed Chapter 13 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 in court or comply with court orders.
In Nevada and other states, you must also undergo a “means test” to determine if you are eligible to file for Chapter 13 bankruptcy. Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) law, if your income is above Nevada’s median income, you must file Chapter 13 bankruptcy instead of Chapter 7 bankruptcy.
During your initial consultation with your bankruptcy lawyer, he or she will determine if you are eligible to file under Chapter 7, or if you are required to file under Chapter 13.
How Long Does It Take to File Bankruptcy Chapter 13?
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, your case trustee will call a meeting of creditors that will take place in three to seven weeks. In the meantime, you must file a repayment plan within two weeks and make your first payment a month after you file.
After your trustee meets with your creditors, the court will hold a repayment plan hearing within six weeks and approve or deny your repayment plan. Upon approval, you will continue to make payments to your case trustee. Chapter 13 typically lasts for three to five years, depending on the length of your payment plan and your income.
What Is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?
Chapter 7 and Chapter 13 bankruptcy have quite a few differences. If you decide to file bankruptcy, it is critical that you understand the key differences between Chapter 7 and Chapter 13 bankruptcy.
These chapter names refer to the sections of the U.S. Bankruptcy Code that outlines exactly how an individual takes care of their debt in each process. The choice to file one or the other determine whether you will need to follow a repayment plan or if you will need to settle your debts with the property you own.
Chapter 7 and Chapter 13 bankruptcy are similar in that they do not allow you to discharge certain debts, including child support, alimony, and certain taxes. However, they are more different than they are similar. The biggest difference between Chapter 7 and Chapter 13 bankruptcy is what happens to your property:
- Chapter 7: Involves selling some or all of your property to pay off your debts. You might file Chapter 7 if you do not own a home or have limited income.
- Chapter 13: Filing Chapter 13 gives you a chance to keep your property if you successfully complete a court-mandated repayment plan.
Therefore, with Chapter 7 bankruptcy, your trustee can sell non-exempt property to settle your debts. As a result, you will not be able to settle missed payments to avoid repossession or foreclosure. However, Chapter 13 provides this opportunity.
Another major difference between Chapter 7 and Chapter 13 bankruptcies is how they impact your credit. For example, a completed Chapter 13 can stay on your credit reports for up to seven years from your filing date. However, the impact on your credit score likely will not be as severe as that of Chapter 7.
For example, Chapter 7 bankruptcy can stay on your credit reports for up to 10 years from the date you file. While this does not mean you cannot open a credit card or take out a mortgage again, you may still pay a lot more in interest rates and fees when borrowing.
Despite this disadvantage, you might choose to file Chapter 7 bankruptcy if you want to clear your debt faster. While Chapter 13 usually takes three to five years to complete, Chapter 7 typically takes anywhere between 90 to 100 days from start to finish.
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. Therefore, if you filed Chapter 13, you can expect to see the bankruptcy fall off your report seven years after the filing date. So, unfortunately, you cannot remove a bankruptcy from your credit report.
While bankruptcy can have a significant impact on your credit file, its effects will not last forever. In fact, filing Chapter 13 may do a lot less damage to your credit than not taking action at all to repay your debts.
How to File Bankruptcy Chapter 13
If you have made the decision to file Chapter 13 bankruptcy, you should prepare for an extensive process and a lot of paperwork.
The first step to filing Chapter 13 bankruptcy Nevada is to gather all important documents. You will need copies of your credit reports from all three bureaus, including Equifax, Experian, and TransUnion.
Before you start filling out any forms, it is important to create a list of all your creditors and calculate how much you owe. Be sure to include all your debts, even if they are not listed on your credit report.
You will also need the following documents:
- Tax returns for the past four years
- Proof of income for the last six months
- Bank statements from the past 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
The next step is to analyze your debt and divide them into two separate categories: secured debts and unsecured debts. Then, determine which debts are priority debts and which debts are non-priority debts. Each of these factors will determine your repayment amount and the order in which your trustee will distribute your Chapter 13 plan payments.
Next, create a budget by listing your total living expenses and factoring in your income. This will allow you to see how much of your debt payments you can reasonably afford each month. If your income is not enough, you will not be able to proceed.
If your Chapter 13 payment plan is feasible, you can move on to taking your first credit counseling course. After completing the course, you will receive a certificate of completion, which you will include with your bankruptcy paperwork.
After completing your credit counseling course, fill out your bankruptcy forms and file your 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 will meet with your Chapter 13 trustee to make sure you filled out your bankruptcy forms correctly and that your proposed plan is feasible.
Then, you will have to attend a confirmation hearing where a judge will decide whether to approve your repayment plan. If the judge confirms your case, you must go forward with your plan and agree to make your debt payments on time.
Hire a Nevada Bankruptcy Attorney
Bankruptcy proceedings are extremely complex. While it is entirely possible to go through the process on your own, it is best to get the help of a Nevada bankruptcy lawyer who specializes in these types of proceedings. This is where Nevada Bankruptcy Attorneys can step in and help. We can ensure you have a smooth bankruptcy proceeding and a fresh start. Contact us today for your free case evaluation.