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Chapter 13 Bankruptcy

Chapter 13 Bankruptcy Attorney Las Vegas

In a chapter 13 bankruptcy, you can keep your property, while paying back all or a portion of your debts over a 3 to 5 five year period.  Unlike a chapter 7 bankruptcy, where your debt is canceled, think of a Chapter 13 as a re-organization of you, your assets, and your debt. 

Who is eligible to file chapter 13 bankruptcy

Bankruptcy is not for everyone, here at Schwartz Flansburg, we assist individuals looking to filing for relief under Chapter 13 of the Bankruptcy Code.  Individuals whose income is greater than the median household income in Las Vegas, Nevada and have unsecured debt (credit cards or medical bills) of less than $360,475.00 and secured debts (your house or car) of less than $1,081,400.00, may qualify for a Chapter 13 bankruptcy.

Debtors that file for bankruptcy relief will have their bankruptcy case administered by a bankruptcy trustee.  For a period of 3 to 5 years, you will make monthly plan payments to the trustee based upon your disposable income.

Chapter 13 Bankruptcy Repayment Plan

The repayment plan is the cornerstone of the chapter 13 bankruptcy process and you reorganization.  This plan describes in detail how much, when and how you will pay each of your creditors, and how you will retain your assets.

How Much Do I Have To Payback My Creditors?

Some of your debts maybe paid in full.  These are often called priority debts.  Priority debts include, child support, alimony and certain tax obligations. After these priority payments, your plan will include your regular payments on secured debt, such as a car loan or mortgage.  The plan must show that any disposable income you have left after making these required payments will go to repaying un-secured debts, such as your credit card and medical debt.  Typically, the trustee will collect your payments each month and disburse it to your creditors based on their priority. For example secured debt, priority unsecured debt, second and general unsecured debt last.

How Long Will My Payment Plan Last?

Your repayment plan will depend on how much you earn and how much you owe.  If your income is above median, you will have to propose a 5 year payment term.  If your income is less than median, you may propose a 3 year repayment term.  If you are able to pay your debts back in full in less than you may be eligible to propose a shorter repayment plan, which will be based on how long it will take you to repay in full.

What Happens If I Can’t Make My Plan Payments?

If you are unable to finish your chapter 13 repayment plan, you or the trustee may modify your plan or let you discharge the debt based on hardship.  Examples of hardship include losing your job or debilitating illness.  The most important part to consider is keeping in communication with our office and the bankruptcy trustee. Keep us up to date should your lose your job or have a long term medical condition that would affect your ability to make your plan payments.

Rebuilding After Filing for Bankruptcy

It’s important to start rebuilding your credit as soon as possible, and that can begin even as some of its effects linger. A Chapter 13 filing can stay on your credit report for seven years.  While nothing but time can erase the bankruptcy from your credit report, if you keep your balances low and pay your bills on time, after a couple of years the bankruptcy will carry less weight.

The Benefits of Filing a Chapter 13 Bankruptcy

For individuals filings, the benefits include the following:

  • Repayment of home mortgage arrears over a period of 36 to 60 months;
  • The ability to avoid, or “strip off”, a second mortgage lien;
  • The ability to reduce, or “cram down”, home mortgages on investment properties to the appraised value;
  • Repayment of IRS tax liabilities over a 36 to 60 month period.

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