Chapter 13 Bankruptcy
An individual may wish to file Chapter 13 bankruptcy if: (1) the individual does not pass the means test and therefore cannot file Chapter 7 bankruptcy; (2) the individual has fallen behind on paying off secured debt (such as a mortgage or auto loan), and wishes to get caught up on the payments and keep the secured collateral (the house or the car); (3) the individual has become a victim of the housing crisis, and wishes to strip off the second mortgage on their home; (4) your non-exempt assets which would be subject to liquidation by the trustee in Chapter 7 bankruptcy but would prefer to keep these assets; or (5) all of the above.
Filing Chapter 13 bankruptcy in Las Vegas will help protect your assets from foreclosure and repossession. It will also discharge your unsecured debts just like Chapter 7 bankruptcy. The difference is, in Chapter 13 bankruptcy, you are required to make a monthly plan payment. A Chapter 13 bankruptcy, sometimes referred to as personal reorganization, is essentially consolidating your debt into one monthly payment. Subject to a bankruptcy trustee's approval, you and the creditors form a Chapter 13 plan that will allow you to make affordable monthly payments and generally pay off the debt within three to five years.
Certainly the amount of your plan payment, as well as the length of your plan, are important questions in Chapter 13 bankruptcy. The length of your plan is determined by comparing your income to the Nevada median income for a household of the same size as your own. If you are “over median”, then you are forced into a five year plan, and must pay all of your disposable income to your unsecured creditors. Your disposable income is calculated by deducting some of your actual monthly expenses along with some statutory standards. After all the deductions are made, you are left with your disposable income. If you are “under median” you can have a plan as short as three years, and are not required to pay in all of your disposable income.
Just like in Chapter 7 bankruptcy, in Chapter 13 bankruptcy you are only required to make one court appearance for your 341 Meeting of Creditors, often referred to simply as your “341.” Prior to your creditors meeting, we will accumulate and submit all the documents that the trustee requires, which simplifies the meeting and often puts clients at ease. The meetings are usually very brief, and the trustee will just ask you a few simple questions regarding your finances and the reasons for your bankruptcy filing.
If you have nonexempt property you want to keep which would be subject to sale under Chapter 7, have a regular income that will allow for both living expenses and making monthly payments, want to strip a second mortgage, or just want to catch up on missed bills, Chapter 13 may be the option for you. For more information on filing bankruptcy in Nevada, please contact us today to set up a FREE initial consultation.
