How Does Chapter 13 Bankruptcy Work?

Post by Resolve Law Group on 01/13/2024

Bankruptcy is a legal process designed to help individuals and businesses eliminate or repay their debts under the protection of the federal bankruptcy court. Among the various bankruptcy chapters, one stands out as a particularly viable option for individuals seeking to manage their debt while retaining their assets. This chapter allows debtors to reorganize their financial obligations and propose a repayment plan to make manageable payments over a period of three to five years. An experienced Nevada Chapter 13 bankruptcy lawyer should always be involved when someone is considering filing for bankruptcy. Not only do they know the state’s laws, but a lawyer can look at each person’s unique situation to determine what the best way to move forward will be. A lawyer from Resolve Law Group would be happy to go over your case in more detail. 

Eligibility And Filing Requirements

Eligibility for this type of bankruptcy requires the debtor to have a regular income, as the repayment plan is based on future income to pay off debts over time. Before filing, it's essential for the debtor to receive credit counseling from an approved agency within 180 days. The filing process involves submitting a petition to the bankruptcy court serving the area where the individual lives. Along with the petition, the debtor must also file a schedule of assets and liabilities, a schedule of current income and expenditures, a statement of financial affairs, and a schedule of executory contracts and unexpired leases.

The Repayment Plan

The crux of this bankruptcy chapter lies in the repayment plan. Within 14 days of filing, the debtor must submit a repayment plan for court approval, which provides details on how the debtor plans to repay debts over the next three to five years. Priority debts, like taxes and child support, must be paid in full, while unsecured debts, like credit card balances, may not require full payment. The debtor's income and expenses are closely examined to determine the repayment capability.

Automatic Stay And Creditor's Meeting

Upon filing, an automatic stay comes into effect, which stops most collection actions against the debtor or the debtor's property. A trustee is appointed to oversee the case. The debtor must attend a creditor's meeting, where creditors can ask questions about the debtor's financial situation and proposed plan.

Confirmation Hearing And Plan Implementation

After the creditor's meeting, there is a confirmation hearing where the court decides whether to approve the debtor's repayment plan. If approved, the debtor must make regular payments to the trustee, who distributes the funds to creditors as outlined in the plan. Your lawyer will be present to assist in understanding what the outcome of your case is.

Discharge Of Debts

Upon successful completion of the repayment plan, most remaining unsecured debts are discharged, releasing the debtor from personal liability for these debts. However, certain debts like alimony, child support, and certain taxes cannot be discharged.

Legal Assistance And Guidance

Navigating the complexities of bankruptcy can be challenging. Legal guidance is crucial in understanding the intricacies of the law, assessing eligibility, and crafting a feasible repayment plan. An experienced Nevada Chapter 13 bankruptcy lawyer can provide valuable assistance every step of the way, from filing the petition to the final discharge of debts.

Contact A Lawyer Today

If you're considering this path to manage your debts and need guidance, seeking professional legal advice from a Nevada Chapter 13 bankruptcy lawyer is a wise first step. By understanding your financial situation, a lawyer can help determine the best course of action and assist in navigating the bankruptcy process to achieve a fresh financial start. Contact Resolve Law Group  to discuss how we can assist you in this important journey towards financial stability and peace of mind.

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