Chapter 13 Bankruptcy
The attorneys at Peters & Associates, LLP help consumers throughout Las Vegas and Henderson, Nevada find effective and manageable solutions to their financial troubles by securing an adjustment of their debts through a Chapter 13 bankruptcy.
What is Chapter 13?
A Chapter 13 debt adjustment involves gathering together all of the consumer's debts and creditors into one place and developing a payment plan to pay off those debts over either a three-year or five-year period. The plan is developed in such a way that it is feasible for you to make the payments within your current means. Debts are adjusted as necessary to make this possible. At the end of the plan, you can receive a discharge of any remaining debt.
You may wonder why you would want to create a three or five-year payment plan under Chapter 13, when you can get a discharge of debt without making payments under Chapter 7. Unlike Chapter 7, Chapter 13 does not require that you sell any of your assets. Also, the type of debt you have may not dischargeable under Chapter 7. Another advantage of Chapter 13 is that it stays on your credit report for less time than a Chapter 7 does, so you can recover from bankruptcy and rebuild your credit more quickly. Finally, Chapter 13 does not have the income threshold and means test requirement that Chapter 7 does, so it is easier to qualify for a Chapter 13.
One of the most attractive features of Chapter 13 is its ability to prevent a foreclosure on your home. If you are in default on your mortgage because you have missed one or more payments, the bank may be initiating foreclosure proceedings to kick you out of your home and sell the property, and if selling the home doesn't pay off the mortgage, you could still be liable for any deficiency. Chapter 13 allows you to catch up those payments you missed by rolling them into the three or five-year payment plan. As long as you stay current on your payments going forward, the bank can no longer foreclose.
When is Chapter 13 Right for Me?
A Chapter 13 payment plan is commonly known as a "wage earner's plan." Chapter 13 is most appropriate if you have a steady job or other regular source of income and can devote a portion of your disposable income to a monthly payment plan. Chapter 13 is also appropriate if you have large amounts of debt which is secured by collateral, such as home loans, car loans, or appliances and furnishings that you bought on credit. Chapter 13 allows you to keep your assets while also becoming debt-free over time. In addition to your own financial responsibility, you may want to consider whether any of these loans were co-signed by friends or family members. Chapter 13 can protect them from having their property attacked to satisfy your debt.
Every situation is unique. Whether you should file Chapter 13 or Chapter 7 or consider another option such as debt settlement depends upon your goals and your own particular combination of assets, liabilities, income and expenses. The first step is to sit down with an experienced bankruptcy attorney to discuss these matters. If you are in the Las Vegas or Henderson area and need to find an effective solution to unmanageable debt, contact Peters & Associates, LLP for a free consultation.
