Chapter 13 Bankruptcy Reorganization

Known as "reorganization" bankruptcy,  Chapter 13 is often the only option for debtors who do not wish to lose their home while they undergo bankruptcy. Chapter 13 bankruptcy requires the debtor to create a plan to pay off some or all of the debt they owe within a time frame of three to five years.

Candidates for Chapter 13 bankruptcy include debtors who make over the median income and can afford to pay at least $6,000 over the next five years toward their debt; people who own valuable, but non-exempt property in Nevada;  individuals who may be able to catch up with their debt if given some extra time; and people who do not wish to lose their home or car due to inability to pay.

The most obvious benefit of Chapter 13 bankruptcy is that it allows you to keep all of your property while you repay your debt, even large homes and expensive cars.  In addition, Chapter 13 can protect you from foreclosure on your home if you uphold your end of the payment plan you will develop in the course of the Chapter 13 process.  Your debts are not totally wiped out, but they can be reduced.

Other benefits of Chapter 13 bankruptcy include the ability to strip or eliminate a second or third mortgage / home equity line of credit while allowing you to keep your home; the ability to cram down or reduce a vehicle that is upside down to current market value (provided the debtor has owned the vehicle for over 910 days);  and the ability to reduce the amount owed in investment properties to fair market value.

However,  Chapter 13 does present some challenges for debtors.  First and foremost, the plan is extended over three to five years, which means that years worth of your income are tied up in repayment.  In addition, some workers, such as stock or commodities brokers, are ineligible for Chapter 13 filings.  And Chapter 13 candidates cannot owe more than $1,010,650 in secured debts (mortgages) and $336,900 in unsecured debts (credit cards).

Instead of liquidating your debt like Chapter 7,  Chapter 13 bankruptcy allows you to reorganize your debt and pay it off over time.  However, you usually do not end up paying all of your debt; instead, your debt is released after three to five years of on-time payment according to plan.  Due to the complexities associated with Chapter 13 debt, including putting together a realistic payment plan,  it's a good idea to seek legal assistance if you're considering Chapter 13.

Sanchez Law Group, Ltd. has experience helping debtors find financial freedom through Chapter 13 bankruptcy.  Our happy clients are able to navigate the bankruptcy system with the helped of an experienced,  aggressive bankruptcy attorney who has their best interests in mind and knows how to protect their assets and their financial future. Think Chapter 13 bankruptcy might be for you?  Contact us today for a free,  confidential consultation.