Bankruptcy is a legal status available to those who are insolvent or otherwise unable to pay their debts. Bankruptcy can provide debtors with a clear path to repay their debts and improve their financial well-being.
There are several types of bankruptcy available to individuals and business organizations. These different types of bankruptcy are commonly referred to by the chapter of the U.S. Bankruptcy Code in which they appear.
Chapter 13 is one of the most common forms of bankruptcy used by individuals. Chapter 13 may allow a debtor to restructure their debts and create a manageable repayment plan.
Each form of bankruptcy has distinct advantages and disadvantages. Selecting the correct form for your particular circumstances depends on multiple factors that vary from case to case.
To discuss the unique aspects of your case and all of your available bankruptcy options, contact the Las Vegas bankruptcy attorneys at 702-DEFENSE.
Who can file for Chapter 13?
To be eligible for Chapter 13 bankruptcy, the debtor’s unsecured debts must total less than $360,475 and secured debts must total less than $1,081,400.
In addition to falling under the maximum debt threshold, the debtor must complete a credit counseling course and must not have had another bankruptcy action dismissed within the previous 180 days.
Nevada Chapter 13 pre-filing requirements
First, the debtor must complete a mandatory pre-filing credit counseling course. These courses are offered at various locations throughout Nevada and are also available online. A list of approved courses can be viewed here.
If the debtor is unable to pay for credit counseling courses, they may eligible for a fee waiver or reduction depending upon their income level. If the debtor’s income is less than 150% of the federal poverty level, they are presumptively entitled to a fee waiver or reduction.
Locations for filing
For residents of the following counties:
The proper location to file the petition will be the Las Vegas filing office, located at 300 Las Vegas Blvd. South.
For residents of the following counties:
- Carson City
- White Pine
The proper location to file the petition is the Reno filing office, located at 300 Booth Street.
Documents Due at Filing
Once the pre-filing credit counseling requirement has been fulfilled, the debtor will be required to complete and submit several documents (known as schedules) at the time of filing for Chapter 13 bankruptcy.
The documents due at the time of filing for Chapter 13 bankruptcy include:
- Voluntary petition; including the following schedules and exhibits
- Schedule B 1: Voluntary Petition
- Exhibit D: Debtor’s statement of completion of credit counseling requirement
- Schedule B 21: Statement of social security number
- Schedule B 280: Disclosure of compensation of bankruptcy preparer
- Schedule B 19: Declaration and signature of non-attorney bankruptcy preparer
- Creditor matrix file
- $281 filing fee
- Schedule B 3A: Application and order to pay filing fee (if paying in installments)
Additionally, the following schedules are due at the time of filing the petition or within 14 days after filing. These schedules generally provide an overview of the debtors assets, property and debts.
- B 201A: Notice to individual consumer debtor
- B 6: Summary of Schedules
- B 6A: Schedule A – Real Property
- B 6B: Schedule B – Personal Property
- B 6C: Schedule C – Property claimed as exempt
- B 6D: Schedule D – Creditors holding secured claims
- B 6E: Schedule E – Creditors holding unsecured priority claims
- B 6F: Schedule F – Creditors holding unsecured non-priority claims
- B 6G: Schedule G – Executory Contracts and Unexpired leases
- B 6H: Schedule H – Co-debtors
- B 6I: Schedule I – Current Income of Individual Debtors
- B 6J: Schedule J – Current Expenditures of Individual Debtors
- B 6: Declarations Concerning Debtors Schedules
- B 7: Statement of Financial Affairs
- B 203: Disclosure of Compensation of Attorney for Debtor
- Verification of Creditor Matrix
- B 22A: Statement of Current Monthly Income and Means Test Calculation
- Declaration Re: Electronic Filing of Petition
- Chapter 13 Plan
- B 19: Declaration and Signature of Non-attorney Bankruptcy Preparer
Once the Chapter 13 petition and all of the required schedules and documents are filed, a trustee will be appointed to the case. The trustee will be impartial and will oversee the bankruptcy proceeding. The trustee will also disburse any payments from the debtor to creditors.
Nevada Chapter 13 Plan
Though all required documents and schedules are important to the Chapter 13 process, the document that will have the most significant impact upon the debtor is the Chapter 13 bankruptcy plan.
The debtor will be required to submit a Chapter 13 repayment plan with the bankruptcy petition or within 14 days thereafter. The plan will provide for regular payments from the debtor, which the trustee will then disburse to creditors until the debts are repaid.
However, successful completion of the repayment plan is not necessarily contingent upon repaying every debt in full. All creditors do not have an equal claim to repayment. Rather, a creditor may have one of three types of claims: priority, secured, or unsecured.
Priority claims cannot be discharged and must be paid in full. Some common priority claims include taxes, child support, and alimony. Even though these debts may not be discharged, they may be reorganized and paid off over an extended period of time.
Debts to creditors that are secured by collateral are known as “secure” claims. Some common types of secure claims include home mortgages and auto loans. If the debtor would like to the keep the collateral used to secure the loan, the bankruptcy plan must require that the creditor holding the secured claim be repaid at least to an extent equal to the collateral.
Unlike priority and secured claims, unsecured claims do not require complete repayment before they may be discharged. Rather, for an unsecured claim to be discharged in Chapter 7, the bankruptcy plan must require that the debtor pay all of his or her disposable income over the period of the plan and the creditor must receive at least as much as they would have if the debtor’s assets were liquidated under Chapter 7.
Repayment according to the terms of the bankruptcy plan must begin within 30 days after the Chapter 13 filing.
After the initiation of the Chapter 13 proceeding, an “automatic stay” will be put into effect. This automatic stay temporarily prevents creditors from attempting to collect on any consumer debts of the debtor for the duration of the bankruptcy proceeding. Consumer debts are defined as debts incurred primarily for a personal, family, or household purpose.
Perhaps most importantly, the automatic stay will allow the debtor to temporarily cease a foreclosure action during the pendency of the bankruptcy, which may then allow the debtor to create a repayment plan and ultimately keep the home.
Nevada meeting of the creditors
Between 21 and 50 days after the Chapter 13 petition is filed, the trustee will schedule what is known as a meeting of the creditors. At the meeting of the creditors, the debtor will be placed under oath and required to answer several questions from the trustee and the various creditors.
The trustee will typically ask several questions regarding the veracity of the schedules and forms submitted by the debtor, whether the debtor has reviewed the forms, and whether the debtor has made complete and accurate disclosures of all of his or her assets and debts.
Creditors may also question the debtor, though the creditors’ attendance is not mandatory.
During this meeting, or shortly thereafter, interested parties can address and remedy potential problems with the debtor’s repayment plan.
Approval of the Chapter 13 repayment plan
The court must hold a confirmation hearing for the debtor’s Chapter 13 repayment plan no later than 45 days after the meeting of the creditors. At this hearing, creditors will be able to object to the terms of the plan for a variety of reasons, the most common being that the plan provides for less repayment than if the debtors assets had been liquidated under Chapter 7.
Once the repayment plan is confirmed, the trustee will collect regular payments from the debtor and distribute them to the creditors.
What happens once the repayment plan is completed?
If the repayment plan has been completed, generally the debtor will be entitled to a discharge of the debts accounted for by the plan.
However, as is the case with Chapter 7 bankruptcy, not all debts can be discharged in Chapter 13. Some common debts that cannot be discharged include certain tax debts and debts related to child support and alimony.
Why should I hire a Nevada bankruptcy attorney?
Restructuring debt in a way that is manageable for the debtor is paramount when filing for Chapter 13 bankruptcy.
A recent study (pdf) done by the U.S. Bankruptcy Court, Central District of California, found that only 0.4% of debtors who filed for Chapter 13 bankruptcy without the assistance of an attorney were able to have their repayment plan confirmed. For debtors represented by attorneys, this number jumped to 55%. Having an experienced bankruptcy attorney to assist with the Chapter 13 process is essential to the success of your case.
Freedom from many debts depends on the successful satisfaction of many complex legal requirements. Successful completion of a Chapter 13 plan can allow the debtor to keep their home and other important property.
Contact the bankruptcy attorneys at 702-DEFENSE today to discuss your specific case.