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Chapter 13 Bankruptcy

Chapter 13 Bankruptcy Filing

Chapter 13 is a type of bankruptcy allowing for the reorganization and repayment of debt. Debtors with an income higher than the state’s median or those hoping to avoid liquidation of personal property are able to restructure their debt and make payments.

Those filing for Chapter 13 will submit a repayment plan proposal that will repay most, if not all, of their debts over a three or five year period. The length of each individual repayment plan is determined by calculating the debtor’s total and disposable income along with available property and living expenses. Three-year repayment plans are typically approved to those with incomes below the state median, while five-year plans are typically given to those with incomes above the median. To qualify for Chapter 13 bankruptcy, debtors must have a regular income, a total unsecured debt under $394, 725, and total secured debt under $1,184,200. A Nevada Bankruptcy Court judge must approve repayment plan proposals and the approved plan must be submitted to creditors. Creditors may object to the plan, however, they must allow an opportunity for repayment.

In some cases, a Chapter 13 repayment plan will require repayment of most, if not all, debt. Limited circumstances allow debtors to reduce certain secured debts to the current market value rather than paying the amount owed.

At the end of the repayment plan period, some remaining debt, such as credit card or medical bills, may be discharged. Other forms of debt, such as student loans, child support, alimony, unpaid tax debt, and bankruptcy filing costs will not be discharged and must be paid in full.

Filing for bankruptcy instates an Automatic Stay that will prevent creditors from taking collection action including calls, letters, or lawsuits. Chapter 13 bankruptcy can help debtors avoid foreclosures, repossessions, service shut off or loss of property