Bankruptcy Basics-Part 1|Martin Law P.C.| Courtesy of US Courts
Channel: Martin Law P.C.
Date: 2018-11-09

This video, courtesy of the US Courts, describes the different types of bankruptcy that can be filed by consumer debtors: The Chapter 13 Bankruptcy,  Chapter 7 and Chapter 11.  Chapter 7 and Chapter 13 are the two types of bankruptcy that are most often filed by debtors.  

Chapter 7-
Chapter 7 is also known as a liquidation because under this bankruptcy the Court will gather all non-exempt property, sell it, and pay the creditors with the proceeds of the sale. However, because of exemptions, the vast majority of debtors will not have to sell off any property that they own.   

For most debtors, Chapter 7,  as it is completed in three to four months is the preferred form of bankruptcy relief.  However, chapter 7 may not be either available, or it may not provide the relief that a debtor wants.   Therefore, if a bankruptcy filer cannot receive assistance from Chapter 7, they are forced to file the 13. 

Chapter 11
Chapter 11 is mainly used for businesses who want to save their business. However, debtors that have too much debt to qualify for a Chapter 13 sometimes may opt to file the Chapter 11.  

Chapter 13- 
Under a 13 you are forced to make payments for three to five years to a trustee. After the three to five years, under most circumstances,  any debt you have left over will be eliminated.  

Chapter 13-Main Reasons
Below are few of the most common reasons why a debtor would file a  Chapter 13 over Chapter 7.  
1.  Income Is Too High-you most likely will not qualify for Chapter 7 if your income is past the median wage.  The median wage is based upon where you live and the number of people in your household.  If you are over the median income,  the only way you will be able to qualify for a Chapter 7 would be if you have extraordinary, legitimate,  expenses.  
2.  Filed A Chapter 7 Within 8 Years-You can only file a Chapter 7 once every eight years.  Therefore, if you want bankruptcy relief, you will have to file a 13.

3.  Non-Exempt Assets- A Chapter 7 will not allow you to keep non-exempt or not essential property.  For example, in Nevada, under Chapter 7, you will be allowed to keep a car worth up to $15,000. However, you will not be able to keep your yacht.   The Chapter 13, under certain circumstances, can allow you to retain your yacht or other luxury property. 

4.   Foreclosure-A Chapter 13 can allow you to get caught up on any past due mortgage payments. However, you will have to have a household income that will enable you to pay your current mortgage and past due mortgage payments.  

This video is a brief overview of the different types of bankruptcy. If you are a Clark County, Nevada resident and are considering bankruptcy, please go to http://sincitylawfirm.com for more information.