Filing The Right Bankruptcy Case Under The Proper Chapter


Making the decision to file for bankruptcy can be difficult, but it may be the best solution for your financial situation. After making the decision to file, you must then decide which type of bankruptcy will be most beneficial. 

For individuals, the most common types of bankruptcy are Chapter 7 and Chapter 13. There are many differences between the two chapters including qualification requirements and how debt is addressed. Deciding which type of bankruptcy chapter you should file can be overwhelming if you do not have experience or knowledge of either. The best way to ensure that your case is filed under the proper chapter is by hiring a reputable bankruptcy attorney in Las Vegas. Bankruptcy attorneys who specialize in the specific laws and court systems applicable to bankruptcy cases are able to provide expert advice, guidance, and service to help you receive a positive outcome. 

Comparing Chapter 7 And Chapter 13

Chapter 7 Bankruptcy

  • About: Chapter 7 is a liquidation bankruptcy through which debt is eliminated by selling the debtor’s nonexempt possessions. Under Chapter 7, unsecured debt such as credit cards, personal loans, and medical bills are eligible for elimination. Secured debt such as child support, alimony, and certain types of tax debt is not eligible for elimination and will need to be paid in full regardless of liquidation. 
  • Qualifications: To qualify for Chapter 7, you will need to have a limited income that falls below the state median pass a means test to determine your amount of disposable income.
  • Process: Control of your case is given to a trustee who will sell nonexempt property such as personal household belongings, jewelry, art, vehicles with equity, and property that is not your primary home. As the property is sold, the trustee will distribute funds to your creditors.
  • Exemptions: Federal and state laws do provide for limited value property exemptions that cannot be sold under Chapter 7 liquidation
  • Timeframe: Liquidation is typically completed within three to four months depending on individual circumstances. 
  • Benefits: under chapter 7, you will not be required to pay back any unsecured debt as your property is sold to cover it. It provides a quicker resolution allowing debtors a fresh start sooner. It is also less expensive than Chapter 13.
  • Impact: While you won’t have to pay back debt, you are at risk of losing a significant amount of your personal possessions. You will also experience an initial negative impact on your credit score and the bankruptcy will remain on your credit report for up to 10 years.

Chapter 13 Bankruptcy

  • About: Chapter 13 is a repayment bankruptcy in which debtors make monthly payments on their overall debt for a period of 3 to 5 years. Following completion of the repayment period, remaining unsecured debt may be discharged. Secured debt such as child support, alimony, and certain types of tax debt are not eligible for discharge and will need to be paid in full.
  • Qualifications: To qualify for Chapter 13, you must have a regular income, unsecured debt under $394, 725 and secured debt under $1,184,200. 
  • Process: Debtors submit a proposed repayment plan during which they will make monthly payments that will pay most, if not all, of debt. A trustee is assigned to oversee the repayment period. At the end of the payment period, the remaining unsecured debt is discharged. The remaining secured debt will not be discharged.
  • Timeframe: Repayment periods last 3 to 5 years. Those with a household income below the state median are typically given three-year plans, while those with an income above the state median are given five-year plans. 
  • Benefits: Under Chapter 13, debtors will not lose their personal property. It also provides an Automatic Stay during which creditors are not allowed to take collective action. Chapter 13 will not appear on your credit report as long as Chapter 7 allowing you to find an approval for a new mortgage or other loans sooner. It will also remove liens on the property. 
  • Impact: Chapter 13 will have an initial negative impact on your credit score and will remain on your credit report for up to 7 years. It also requires monthly payments on debt making it more expensive to complete than Chapter 7. 

Las Vegas Bankruptcy Attorney

Deciding which bankruptcy type will most benefit your personal situation is to work with a knowledgeable and experienced bankruptcy attorney in Las Vegas. At Fair Fee Legal Services, we have extensive experience working with the Nevada Bankruptcy Court and have a detailed understanding of each chapter of bankruptcy. Contact us today to get started on the right bankruptcy case for you.

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