CHAPTER 13 BANKRUPTCY AND HOW IT WORKS
Chapter 13 bankruptcy requires the debtor to repay some or a percentage of their debt according to a repayment plan. To qualify, the debtor must have a regular source of income in order to make payments. Income includes wages, retirement, social security, and disability benefits or other sources of income. In a Chapter 13, the bankruptcy trustee is appointed to investigate your finances, make sure your plan is fair, address your creditor’s claims, and pay down your debts according to the plan. A Chapter 13 bankruptcy gives you the chance to save your home from foreclosure and Nevada gives a homeowner a chance to enter the Mortgage Mediation Program where a homeowner can apply for a loan modification while in the bankruptcy. In addition, if modification is not an option, the bankruptcy allows you to stop foreclosure proceedings and catch up on past due payments with a repayment plan. Chapter 13 bankruptcy also allows you to catch up on your payments for other secured debts, like car loans, and extend the payment over the period of your repayment plan, which could lower your monthly payments. Chapter 13 can also protect the interests of people who may be co-signers on your loans or other debts.
The Benefits of Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy provides individuals with important advantages, including:
- Preventing mortgage default and stopping foreclosure by allowing you to pay any mortgage arrearages through the Chapter 13 plan or with a loan modification
- No interest accrues on credit card and finance company debt after the filing
- No interest or penalties accrue on tax debt during the bankruptcy
- You may be able to eliminate or reduce the second mortgage
What can Chapter 13 do?
- Stop repossession of a car or other property.
- Stop debt collection harassment.
- Pay a percentage of the debt and discharge what’s left of unsecured debt after the Chapter 13 payment plan is over
- Prevent debt collectors from pursuing outstanding debts that are listed in the bankruptcy.
- Stop foreclosure or repossession and allow you to catch up on missed payments.
What can’t be done through Chapter 13?
- Discharge past-due child support, property taxes, punitive and court fines, IRS debt, and most student loans
- Discharge debts that arise after the bankruptcy has been discharged
- Eliminate creditor’s rights to secured property like car loans and home mortgages
Chapter 13 Bankruptcy does not involve the sale of assets, but rather allows the individual to keep their property while repaying some or all the debt over a three to five-year period. Five years is the more common timeframe. The amount an individual is required to pay back depends on their income and the current value of the property. After the repayment period, the remaining balances on the unsecured debt may be eliminated. At Jacovino Law, we pride ourselves on offering clients personalized and comprehensive Bankruptcy services. We provide our clients with knowledge and compassion to effectively navigate the Bankruptcy process. Contact us at (702) 776-7179 or schedule a consultation online at https://jacovinolaw.com/schedule-a-consultation/.