Nevada Bankruptcy Attorney

Chapter 7 bankruptcy basics: Chapter 7 bankruptcy allows a quick discharge of most debts while keeping all the property you need.

Whether you are facing overwhelming debt or just want to eliminate debt to be in a better financial position, bankruptcy is a good option.

How do I keep my property in Chapter 7 bankruptcy?

Exemptions!  Every state has a list of property that cannot be taken by creditors.  Whether a creditor sues you or garnishes your wages, there is certain property that they cannot take.  This list of property is “exempt” from being taken by creditors.  This is where we get the name “exemptions” – or property described by state law that creditors cannot take.

What property can I keep in bankruptcy?  Can I keep my house and car?

Bankruptcy exemptions will include equity in your car and your home.  Unless you own your car and house outright, you probably will not have a problem exempting them.  Most people who file Chapter 7 are able to keep their car and house through the bankruptcy process if they want to.  If you do not want to keep your car or house and they are financed, you can surrender them in the bankruptcy process and owe nothing.

Exemptions will also include property such as household furnishings, which includes your furniture, couch, bed, plates, silverware, TV, and essentially everything you need to live.  You can even keep some cash or some money in a bank account.  Of course, the measurement of your bankruptcy exemptions is done on the day that you file.  No trustee is going to come out to see if you actually have one more end table than you declared, but it is nice to be truthful under oath.  Also, if you have some money or property that is not going to be exempt, you will want to make sure that you do not have that money or property on the day you file.

Common questions about exemptions surround retirement accounts, disability, social security, and veteran’s benefits.  All of these are exempt.  Bankruptcy will not affect these accounts or benefits.

Can I file Chapter 7 bankruptcy?

Probably.  Most people do.  Nine out of every 10 bankruptcies are Chapter 7.  There are several ways to qualify.  The U.S. Bankruptcy Court has established a test called the means test.  If you pass the means test, you can file a Chapter 7 bankruptcy.  However, you automatically pass the means test if you earn less than the mean income in your state.  The mean income in your state is determined by the size of your household.  For example, if the number of people in your household is three, and you make less than about $50,000 per year from all sources, you qualify.  You do not even have to take the means test.

If you make more than the mean income in your state, you can still qualify for a Chapter 7 bankruptcy by passing the means test.  The means test takes into account your actual expenses.  There are some limitations on your actual expenses, but if there is no money left after subtracting reasonable expenses from your income, you can still qualify for a Chapter 7.

What debts are discharged in Chapter 7 bankruptcy?

Chapter 7 bankruptcy will discharge most unsecured debt that does not receive special treatment like student loans or some taxes.  Chapter 7 will also discharge secured debt where the property is surrendered.  If you decide to keep the secured property, you will simply have to pay the secured debt.

Unsecured debt includes credit cards, medical bills, store credit cards, and any debt where the creditor will not take property from you if you don’t pay.  There are some kinds of unsecured debt that are treated differently by the court.  Child support, alimony, student loans, and fines ordered by a court are good examples of unsecured debts that are more difficult if not impossible to discharge in Chapter 7.

Secured debt is when the creditor will take property from you if you don’t pay.  Car payments and house payments are examples of payments of secured debt.  If you don’t make the payments, the creditor will take the car or the home back.  Bankruptcy allows you to decide whether you want to keep these things.  If you decide to keep a secured item, you will have to continue making the payments and probably complete a reaffirmation agreement.  If you decide to forfeit this property, you can simply stop paying and owe nothing.  Secured debt is not dischargeable if you want to keep the property.  You cannot discharge the balance on your car loan and still keep the car.

How do I pay for bankruptcy?

It seems like a strange position to be in.  I have to file bankruptcy because I don’t have any money, but I have to pay money to file bankruptcy.  How can I pay money I don’t have?

Paying for bankruptcy is always one of the more challenging issues with filing bankruptcy.  Most bankruptcy lawyers will take payments, but the payments have to be complete before filing.  This is to prevent discharging the bankruptcy attorney’s fees in the bankruptcy.  Attorney’s fees are unsecured debt and could be discharged just like any other debt.

If you are subject to garnishment or foreclosure, you won’t have time to make payments.  In this case, you still have a few options.  You could file a Chapter 13.  In this case, you will need to find an attorney willing to file the Chapter 13 bankruptcy for little money down.  This is risky for the attorney.  If you don’t make any payments to the bankruptcy trustee, the bankruptcy attorney will not make any more money than you paid up front.

Another option to pay for your bankruptcy is to sell or finance some property.  If you are able to borrow money against some property, and you intend to keep that property, it might be acceptable.  You will have to pay the new debt after the bankruptcy.  But you would be able to file the bankruptcy right away.  Of course, it is always an option to sell some property.  Do you have some nice property that a bankruptcy lawyer might like?  Taking a loan that you intend to repay against property you intend to keep or selling some other property might also help with property that might be nonexempt.  If someone is secured against the property or if you no longer own the property, you will not need a bankruptcy exemption to protect it.

Can I pay for bankruptcy with a credit card?

You are not supposed to, but yes.  Paying for a bankruptcy with a credit card could be seen as a fraudulent purchase.  After all, if you have no intent to repaying the credit card, you will be getting a free bankruptcy.  As a practical matter, the credit card company will likely not file all of the paperwork to challenge the purchase.  Even if it does, it likely will settle for a small percentage of the amount you paid your bankruptcy attorney for the bankruptcy.  Of course, the bankruptcy lawyer might not accept a credit card payment, and the creditor might ask that your discharge be disallowed.  It is probably not worth the risk, but it is possible.

Get Help from a Nevada Bankruptcy Lawyer

It is important to work with an experienced Las Vegas bankruptcy attorney who understands the legal system and how to help you avoid potential traps. Contact us today at 702-997-4149 to schedule a free consultation.

Probably.  Filing for bankruptcy is an option people do not want to consider until it is too late.  Once you get past the stigma of bankruptcy, it is a really good program.  The earlier you consider whether bankruptcy could help you, the better off you will be.

What is bankruptcy?

Bankruptcy is a federal program to help with debt.  The ability to deal with debt in bankruptcy has been around since the country was founded.  The rules have changed over the years, but the concept remains the same.  Anyone can have trouble with debt.  Debt problems should not define who you are or keep you from living your life.  So, there is a fresh start called bankruptcy.  It is just one way the government takes care of you.  There is no reason to resist using it.  When you get old enough to retire, are you going to refuse to use social security?  Why would you refuse to use bankruptcy?  They are both government programs for the benefit of the people.

Bankruptcy is how the federal government wants you to deal with overwhelming debt.  Bankruptcy is so important to the federal government that it does not leave it to the state courts.  The United States Bankruptcy Court still handles bankruptcies in every state.  Of course, the government has an interest.  It does not want you to get sick of working just to pay your creditors.  If you do, you might stop working and stop paying taxes.  To keep you on the tax rolls, the government will tell the banks to get lost and give you a fresh start.

Bankruptcy is becoming more acceptable as life is getting harder in America.  America is producing more “working poor” than ever before.  Working hard at a job every day is no guarantee you will be able to pay your bills anymore.  Popular magazines even discuss bankruptcy as it becomes an accepted means of dealing with debt.

How do I know when to file for bankruptcy?

You will probably not realize you need bankruptcy until long after you really do.  The perfect time to file bankruptcy is at the tipping point where your income no longer meets your expenses.  Unfortunately, not many people realize that this is the beginning of the end.  Because of cheap credit options and other means to deal with debt, it might be years before it becomes clear that bankruptcy is the answer.  It often doesn’t even seem like a problem until it’s too late.  Early warning signs are paying a bill late or charging something on a credit card to worry about later.  If the income is not enough to pay expenses now, there will not be extra income to catch up later.  This downward spiral can continue for a very long time.  It is best to realize it early and address the issue.

Do I have to be broke to file bankruptcy?

No!  The biggest mistake people make is spending all their money and running up all their debt trying to avoid bankruptcy.  There is no reason to put off filing until you are broke.  When you file bankruptcy, you get to keep all your exempt assets.  This means that you will almost certainly be able to keep your home and car in bankruptcy.  You also will be able to keep all your household goods.  You can keep your sofa and your dining room table and your refrigerator.  Bankruptcy does not try to punish you.  Bankruptcy wants to leave you all the things you need to get a fresh start.  Bankruptcy is a beautiful program.

How do I keep my stuff in bankruptcy?

The Chapter 13 and Chapter 7 bankruptcy petition asks you to self-report your assets.  There are many ways to do this wrong that will alert the trustee.

Essentially, you make a list of all the stuff you own.  You then assign a “replacement value” to each item.  This is tedious, but it will lend credibility to your petition to do the exercise.  For example, list your couch under household goods and determine what it would cost to replace your couch.  You will also have to list the statute that exempts your couch.  Replacement value on a used couch does not mean you price out a new couch.  You look for a price on a used couch of similar age and quality.  Look on Craigslist or letgo or one of the other many apps and sites for listing and buying used goods.  Once you find a good price, list the used price as the replacement price of your couch.

A trap to stay away from is not reporting anything on your petition.  The trustee will then grill you at the 341 creditors meeting about whose clothes you are wearing because you did not list any clothes on your petition.  There will be questions about your empty house with nothing to sleep on.  Also, you do not want to play games by saying that stuff is not yours.  Nobody believes you are just holding it for a friend.  The bankruptcy court is not trying to take your last nickel.  Just declare the stuff, and it will be fine.

Can I keep my motorcycle in bankruptcy?

Probably.  Every state has a motor vehicle exemption.  You can use that motor vehicle exemption to keep your motorcycle.  For a specific description, please read “Can I keep My Car in Bankruptcy?”

Can I keep my house in bankruptcy?

Probably.  Every state has a homestead exemption.  You can use the homestead exemption to exempt the equity in your home.  For a specific description, please read “Can I Keep My Home in Bankruptcy?”  Even if your home value has appreciated and the amount of equity in your home is over the homestead exemption, bankruptcy can still help you.  A Chapter 13 bankruptcy might work better.  Chapter 13 bankruptcy is a powerful debt management tool.

File Bankruptcy Early and Often

Bankruptcy is an amazing tool.  It can help you even more if you realize it early.  The quicker you consider bankruptcy, the better off you will be.  We have professional debt counselors who can chat with you right now.  You can also call or email to schedule a free consultation with an attorney.  You will meet with an attorney, not a paralegal or salesperson.  You will get real legal advice.  The earlier you consider it, the sooner you will see the path back to life for yourself, not your creditors.  Contact us now.

When a person considers bankruptcy, a common question is how much bankruptcy costs.  There are several expenses associated with a successful bankruptcy filing.  Some bankruptcy fees depend on your income.  Your income will likely determine whether you file Chapter 7 or Chapter 13 bankruptcy.  Other bankruptcy costs depend on how much debt you have.  More or complex debt can lead to higher bankruptcy fees.  The most important factor when it comes to bankruptcy expense is hiring the right bankruptcy lawyer.  Some attorneys overcharge.  You might overpay if you do not know what to expect.  Let’s look at Chapter 7 and Chapter 13 bankruptcy attorney’s fees, court filing fees, and the required classes.  This will help you protect yourself from bankruptcy attorneys trying to charge too much.

What is a basic Chapter 7 bankruptcy? (Yes, you can almost certainly keep your home and car.)  

If you qualify for Chapter 7 bankruptcy, the process is very straightforward.  The goal is to discharge the debt and keep the assets.  This usually can be accomplished.  There are some debts that cannot be discharged.  Secured debt on assets you would like to keep, student loans, and some taxes are frequent considerations.  Most people are able to keep all their assets, including their home and car.  Check with the list of exemptions in your state.  There are some assets that might need some consideration before you file if they are not included in the exemptions. The value of most homes you live in and cars you drive is included in the exemptions in every state. In almost every case, people are able to keep their home and car.

How much are the attorney’s fees for filing Chapter 7 bankruptcy?  

Chapter 7 attorney’s fees vary from state to state, but a general range is from $1,000 to $1,500.  This can be made in payments to the attorney.  For example, in Nevada and Colorado, attorney’s fees are a little higher than they are in Arizona.  Filing bankruptcy in Las Vegas or Denver could cost a couple hundred dollars more than a bankruptcy in Phoenix.  Regardless of whether you are filing a Denver, Las Vegas, or Phoenix bankruptcy, however, the range of attorney’s fees is the same.

What is a basic Chapter 13 bankruptcy?

Chapter 13 bankruptcy is used for incomes well above the Chapter 7 guidelines, nonexempt asset protection, or financing debts that cannot be discharged, such as student loans.  In Chapter 13, a debtor will pay their disposable net income to the court for a number of months. After the payments, the rest of the debt is discharged.  The payments are whatever the debtor can afford.  Subtract expenses from income; pay what’s left.  The payments can be really small, and the debt discharged can be really big.  You do not have to repay all your debt!  In fact, you will likely repay little or no unsecured debt, just like a Chapter 7.  Chapter 13 is a much better plan in many cases.

How much are attorney’s fees for filing Chapter 13 Bankruptcy?

The attorney’s fees for Chapter 13 are set by the bankruptcy court.  Chapter 13 fees vary by jurisdiction, but every attorney eventually gets paid the same.  Some of the fees are paid by you to the attorney before filing.  The rest of the fees are paid by the trustee to the attorney from the payment plan after filing.

The real focus should be the amount of money you pay the attorney before filing.  After your up-front fees, the rest of the attorney’s fees will come from your plan payments instead of going to your creditors.  It is better for you to pay as little up front as you can.  Some attorneys will want $2,500 or more up front before taking your case.  A Denver or Phoenix Chapter 13 bankruptcy can be filed for as little as $500 up front through our site.  A Las Vegas Chapter 13 can be filed for as little as $750 up front.

How much are filing fees for Chapter 13 and Chapter 7 bankruptcy?

Filing fees for each case are about $300.  These fees can normally be paid to the court after filing.  The court offers a payment plan for payment of the filing fees.  It is much more difficult to get the fees waived, but it is possible.  After filing, you will not be making payments to any of your other unsecured creditors.  Payment of the filing fee through a payment plan should work for almost everyone.

What is a credit counseling class?

The credit counseling class is a quick overview of credit that is required by the bankruptcy court before filing a petition.  It can be taken online or over the phone.  The credit counseling class covers things like where to find inexpensive items and the real cost of credit.  There is only one class.  It lasts about an hour.  You are not required to learn anything.  You just have to take it.

How much does the credit counseling class cost?

A credit counseling class should cost about $50.  You can normally take the class through your attorney.  You will need an hour alone with an internet connection or a telephone.  If you need help finding an internet connection, the library can help.  You could even take it at your attorney’s office.  Finding the free hour is up to you.

What is a debt management class?

Much like the credit counseling class, the debt management class is required by the bankruptcy court.  It is a longer class, usually over an hour.  It can also be taken online or over the telephone.  The debt management class must be taken after you file bankruptcy but before discharge.  In the case of Chapter 13 bankruptcy, the class may not be taken for several months.  The bankruptcy court will send notice to make sure you don’t forget.

How much does the debt management class cost?

The debt management class also costs about $50.  The credit counseling class and debt management class can both be taken online.  Your attorney will help you register for the classes.

What if I need to file bankruptcy right away? It’s an emergency bankruptcy filing.  

Sometimes, you need to file bankruptcy right away.  This could be the case to stop a garnishment, foreclosure, or repossession.  A bankruptcy can be declared in just a few minutes.  The exhaustive documentation can all be done later.  Filing an emergency bankruptcy is a much more involved process.  The documentation takes several times as long.  Because of this, there may be a fee for emergency filing charged by your attorney.  These fees are usually about $500.

Can a friend or paralegal help me with bankruptcy?  

Some bankruptcy filings do not go as smoothly as planned.  This is why it is always a good idea to meet directly with your bankruptcy attorney.  Meeting with a paralegal in the bankruptcy office will not prepare you for bankruptcy.  The paralegal cannot represent you.  If there are additional hearings like a 2004 exam, reaffirmation hearing, redemption objection, presumption of abuse, conversion hearing, or any other number of objections or adversary proceedings, a paralegal is just not good enough.  Having a friend who claims to know all about bankruptcy help you with your documents is also asking for trouble.  Few attorneys will take a case started by a paralegal or messed up by a friend.

Friends and paralegals are going to charge something for their help.  The attorney’s fees to guarantee your bankruptcy is done right are just not that expensive for the assurance.  The attorney’s fees can be made in payments and are well worth it if someone gets interested in your case.

A number of cases are randomly chosen by the bankruptcy trustee for audit.  In this case, there will be a 2004 exam that could take several hours of an attorney hired by the government going over every line of your filing.  Your case could be chosen.  This is only one instance in which the amount paid to a bankruptcy attorney is worth more than completing the documents.  It is an insurance policy to defend against the government’s lawyers.  There really is no better value than a bankruptcy attorney.

When a creditor presents a claim against a Chapter 7 bankruptcy estate, it must be legally valid. In other words, if the creditor could not normally sue to enforce the debt outside of bankruptcy, it cannot seek to collect the debt from the bankruptcy trustee. After all, bankruptcy is about giving a second chance to the debtor, not the creditor.

Time Limits on Creditor Claims

To put this in context, consider the fact that Nevada has a four-year statute of limitations on open credit accounts with a revolving balance. Let’s say you have a bank credit card with an outstanding balance of $1,000. You made your last payment in March 2013. You have made no effort to pay the balance since then and simply ignored any collection notices sent by the bank.

In April 2017, you file for Chapter 7 bankruptcy petition. The bank files a claim for the $1,000 against your bankruptcy estate. At this point, the claim is invalid because more than four years has elapsed. Even if you never filed for bankruptcy, the bank could not legally sue to collect the judgment in Nevada state court.

What Happens When State Laws Conflict in Bankruptcy?

Statutes of limitations differ between states. This can pose an issue in bankruptcy cases, which are governed by a combination of federal and state laws. The U.S. Ninth Circuit Court of Appeals, which has jurisdiction over bankruptcy cases from Nevada and other western states, recently confronted the question of how to deal with such a conflict in practice.

In this case, the debtors are a married couple living in California. In 2007, they purchased a condominium in California. There were two outstanding loans against the property. Unfortunately, the debtors defaulted on the loans, and the lender with the priority claim foreclosed.

This left the second lender with an outstanding debt of $42,000. Apparently, no action was taken to collect on this debt. The debtors filed for Chapter 7 bankruptcy protection in California in 2013, nearly six years after taking out the original loan. The lender then filed a claim against the bankruptcy estate.

Here was the problem: California has a four-year statute of limitations on the enforcement of written promissory notes like the one securing the bank’s loan. But the lender was a bank based in Ohio, which has a six-year statute of limitations. Furthermore, the note itself said it was governed under the terms of Ohio law.

If the bankruptcy court enforced the California time limit, the bank’s note was invalid and the trustee of the debtors’ bankruptcy estate had no obligation to pay off the loan. But if Ohio law applied, the note and the creditors’ claim were still valid. The debtors obviously encouraged the bankruptcy judge to apply California law since it was to their benefit. But the judge decided Ohio law should apply and overruled the debtors’ objection.

The Ninth Circuit agreed that this was the right decision. Normally, when parties sign a written contract specifying a “choice of law,” that decision is binding in any subsequent litigation. So, in the normal course of events, Ohio’s six-year limit would apply to the note.

But this was not a normal situation. The Ninth Circuit said the note did not specifically state it applied to the statute of limitations. It was therefore deemed “silent on the issue.” (One of the Ninth Circuit judges disagreed on this point and felt the note’s choice of Ohio law was binding on the bankruptcy court.)

That said, there were “exceptional circumstances” that still justified applying Ohio’s longer time limit. Basically, the Ninth Circuit said that applying California’s shorter statute of limitations would unfairly prejudice the creditor’s rights. After all, if the debtors had not filed for bankruptcy, the lender could have moved to enforce its note under Ohio law. But once the debtors sought Chapter 7 protection, the creditors had “no forum for its claim” other than the bankruptcy court in California. Therefore, it would be “unfair” to dismiss the creditor’s claim based on California’s stricter time limit.

Get Help from a Nevada Bankruptcy Lawyer

This is just one example of the highly technical legal issues that can arise in a Chapter 7 bankruptcy case. While most bankruptcies are resolved in a few months without any notable creditor objections, when something does go wrong, it can lead to more extended litigation. It is important to work with an experienced Las Vegas bankruptcy attorney who understands the legal system and how to help you avoid potential traps. Contact the Law Office of Erik Severino today at 702-997-4149 to schedule a free consultation.

 

1 bankruptcyattorney-lasvegas.com/personal-bankruptcy/chapter-7-bankruptcy/

2 https://scholar.google.com/scholar_case?case=14959371693978667337&hl=en&as_sdt=6,47

Chapter 7 bankruptcy is designed to “liquidate” your nonexempt assets and use the proceeds to pay back your creditors as much as possible. Many assets are not liquidated, however. Federal and state laws exempt a good portion of a debtor’s assets to ensure he or she has sufficient means to support himself or herself after the bankruptcy case ends.

But in many Chapter 7 cases, the debtor has no assets or what the debtor does have is either covered by Nevada state bankruptcy exemptions or already subject to a secured creditor’s lien (e.g., a home mortgage or car loan). So, what happens when there are no assets to pay back the creditors?

Handling a “No-Asset” Bankruptcy

In a Chapter 7 case, the bankruptcy court appoints a trustee to take charge of the debtor’s estate. The trustee is the person who is responsible for collecting and liquidating the debtor’s nonexempt assets. In a typical Chapter 7 case, the trustee must file a report with the court listing the bankruptcy estate’s assets. Creditors then must file a proof of claim with the court, allowing the trustee to make distributions in an orderly fashion.

But if the debtor has no nonexempt assets, the trustee is required to file a “no-asset” report with the court. The creditors do not have to file their claims since there is nothing for them to recover. Once the bankruptcy judge confirms the no-asset report, the debtor is typically discharged from any further obligation to pay most of his or her unsecured creditors. (Some debts are not legally eligible for bankruptcy discharge, such as child support obligations and certain types of student loans.)

Of course, it is possible that the trustee will later find assets that were either accidentally omitted from the original bankruptcy filings or intentionally hidden by the debtor. In such cases, the bankruptcy court will allow creditors additional time to file claims. Of course, it should go without saying that you should never attempt to conceal assets from a bankruptcy judge or trustee. A debtor may face severe consequences, including the revocation of a previously granted discharge and possible criminal prosecution.

Is Bankruptcy Worth the Effort?

You might be wondering if there is any reason to even file for bankruptcy if all your assets are already exempt from creditor collection. Bankruptcy does involve a certain amount of time and money, and you might decide it is not worth the hassle. But here are a few things to consider when deciding if a “no-asset” bankruptcy is right for you.

First, if a creditor is threatening you with a lawsuit – or has already obtained a judgment against you – filing for bankruptcy imposes an automatic stay that prevents any further legal action until a judge decides otherwise. The automatic stay means all collection efforts must cease immediately. This includes secured creditors, so even your mortgage lender must suspend any foreclosure proceedings. And while the stay will not get you out of your mortgage obligations, it can buy you time to negotiate with the lender and possibly catch up on any missed payments.

On the other hand, you may be in a situation where your creditors have no legal recourse against you even if you do not seek bankruptcy protection. For any debt, there is a statute of limitations – a state-imposed legal deadline for filing a lawsuit against a debtor. For “open accounts” like credit cards, the statute of limitations in Nevada is four years. So, if you have a credit card that has not been paid in five years and the bank has yet to take legal action, you are “in the clear,” at least in terms of not facing a civil judgment.

Of course, any unpaid debts may be reflected on your credit report. Filing for Chapter 7 bankruptcy allows you to “wipe the slate” and start over without any prior debts hanging over your head. This alone might justify filing a no-asset bankruptcy.

Need Advice from a Nevada Bankruptcy Lawyer?

The decision to file for bankruptcy is never easy. Many people do not want to admit they have “failed” and require legal protection. But bankruptcy is not a sign of moral weakness. Often, a sudden, unexpected debt – a medical bill following an accident, for example – simply overwhelms individuals of modest means. Bankruptcy is meant to protect them from a lifetime of crippling debt obligations.

An experienced Las Vegas bankruptcy attorney can sit down with you and review your financial situation. The Law Office of Erik Severino offers personal attention to individuals facing the prospect of Chapter 7 bankruptcy. Call us today at 702-997-4149 to schedule a free consultation.

1 bankruptcyattorney-lasvegas.com/personal-bankruptcy/

Chapter 13 is sometimes called the “wage earners” or “reorganization” bankruptcy. It is designed primarily for people with a regular income who may have fallen behind on their debt payments, and people who do not qualify for chapter 7 bankruptcy. In chapter 13, individuals work with a credit counselor and their attorney to develop a plan which allows them to restructure the timing of payments of most of their debts over a 3-5 year period. The debtor’s disposable net income (DNI) is used to cover a portion of their debts; this is the amount left over after all of the debtor’s monthly bills are paid. Once the debtor makes payments for 3-5 years, most remaining debts are discharged. There is no income qualification test for chapter 13, but unsecured debt must be less than $394,725 and secured debt less than $1,184,200 (these numbers are adjusted periodically).

The biggest advantage of chapter 13 is that it can prevent foreclosure and loss of home. The debtor continues to earn a regular paycheck and is able to eliminate some debts (medical bills, credit card debt) while getting caught up with past due mortgage payments. Debtors may still lose their home, however, if their mortgage company completes a foreclosure sale before the debtor’s bankruptcy petition is filed, or if the debtor does not make the mortgage payments which fall due after the petition date. Another advantage of chapter 13 is that it protects co-signers and prevents debtors from having to deal personally with their creditors.

The chapter 13 process begins with credit counseling for the debtor with an approved agency, at least 180 days prior to filing the bankruptcy petition. A payment schedule will be determined, which is submitted at the time of petition or within 14 days, along with documentation and required fees. The documentation will include lists of creditors, assets, liabilities, monthly expenditures, contracts, etc. The debtor may arrange to pay the required fees in up to four installments.

Once the petition is filed, a trustee is appointed who will oversee the process, collect DNI from the debtor, and distribute monies to creditors in a structured and timely fashion. At this point a “stay” is put in place which stops home foreclosure and prevents creditors from suing, garnishing wages, or making harassing phone calls to the debtor. The trustee will arrange for a meeting with the creditors within 21-50 days of petition; the debtor must be present to answer questions. Then a hearing is held before a judge, who will determine whether the payment plan is feasible and follows the stipulations of the bankruptcy code.

Payments of DNI to the trustee must begin within 30 days of filing for bankruptcy. Following the payment schedule, payments are made biweekly or monthly to the trustee (payroll deduction may be used), who then pays the creditors. The first claims paid by the trustee cover most taxes and the cost of the bankruptcy proceedings. They then pay the holders of secured debts, followed by unsecured debts. Creditors may receive less than what they are actually owed.

The final step of chapter 13 is the discharge, or erasure, of most remaining debts. Generally long-term debts cannot be discharged through chapter 13, such as mortgage, child support, student loans, or restitution owed for personal injury or death caused by DUI. The discharge rules for chapter 13 have recently undergone revision, and are more complex than the chapter 7 statutes.

An experienced bankruptcy attorney can help you navigate the nuances of the bankruptcy code to determine whether chapter 13 is the best solution for your financial situation. A free, 30-minute introductory appointment is available from the Law Office of Erik Severino at (702) 997-4149. Your case will be handled with his personal attention and his commitment to provide you with resolution, protection, and integrity in the process. Erik Severino has a degree in economics from the University of Nevada, Las Vegas, and his Juris Doctorate from the William S. Boyd School of Law, UNLV. He has been licensed to practice in Nevada since 2006, concentrated exclusively on consumer bankruptcy law since 2009, and in 2016 was awarded the Avvo Clients’ Choice Award.