What Is a Nevada Chapter 13 Payment Plan and How Long Does It Last?

Chapter 13 bankruptcy — sometimes called a wage earner’s plan — is a powerful legal tool for Las Vegas residents who want to keep their property and reorganize their debt rather than liquidate. Unlike Chapter 7, which eliminates most unsecured debts quickly, Chapter 13 involves a multi-year repayment plan approved by the bankruptcy court. Understanding how the plan works, what you pay, and what happens if your circumstances change is essential before you decide whether Chapter 13 is the right choice for your situation.

How Chapter 13 Payment Plans Work in Nevada

When you file for Chapter 13 bankruptcy in Nevada, you propose a repayment plan to the court that outlines how you will pay back all or a portion of your debts over a period of three to five years. The plan is funded by your “disposable income” — the money remaining after you subtract allowed living expenses from your monthly income using IRS standards and actual documented expenses. Your plan payments go to a Chapter 13 trustee, who distributes the funds to your creditors according to a priority structure established by federal bankruptcy law.

The plan must be confirmed by the bankruptcy court, which reviews it to ensure it meets all legal requirements. Creditors have the opportunity to object to your proposed plan before it is confirmed. Once confirmed, the plan creates a binding obligation between you and your creditors for the duration of the plan period.

Three Years vs. Five Years: What Determines Your Plan Length?

Whether your Chapter 13 plan lasts three years or five years is determined primarily by your income relative to Nevada’s median income. If your current monthly income, multiplied by 12, is less than Nevada’s median annual income for a household of your size, you may qualify for a three-year plan. If your income is above the Nevada median, the bankruptcy code requires a five-year plan.

Nevada median income figures are updated periodically by the U.S. Trustee Program. As of recent figures, the median household income in Nevada for a family of four exceeds $85,000 annually. Your attorney will calculate your exact disposable income and plan length based on your specific household composition and income at the time of filing.

What Gets Paid in a Chapter 13 Plan?

Priority Debts — Paid in Full

Priority debts must be paid in full through your Chapter 13 plan. These include certain tax debts owed to the IRS or Nevada Department of Taxation, domestic support obligations such as child support and alimony arrears, and certain other obligations given special treatment under the bankruptcy code. If you are behind on child support or taxes, Chapter 13 allows you to catch up on these arrears through your plan while stopping collection actions.

Secured Debts — Mortgage and Vehicle Arrears

One of the most valuable features of Chapter 13 is the ability to cure mortgage arrears and catch up on a car loan in default. If you are behind on your Las Vegas home mortgage, Chapter 13 allows you to spread the arrears over the life of the plan while resuming regular monthly payments directly to your lender. This is one of the only tools available to stop foreclosure and save a home. Vehicle loan arrears can be treated similarly, and in some circumstances, Chapter 13 allows you to “cramdown” the amount you owe on a vehicle to its current market value.

Unsecured Debts — Your Disposable Income

Unsecured creditors — credit card companies, medical providers, personal loan lenders — receive your remaining disposable income after priority and secured obligations are paid. In many Chapter 13 cases, unsecured creditors receive pennies on the dollar, and the remaining balance is discharged when you complete the plan. This can result in the elimination of tens or hundreds of thousands of dollars in unsecured debt while preserving your assets.

What Happens If You Miss a Chapter 13 Plan Payment?

Missing a plan payment is a serious matter in Chapter 13. If you fall behind, the trustee or a creditor may file a Motion to Dismiss your case. If your case is dismissed, the automatic stay lifts and creditors can resume collection actions, including foreclosure, repossession, and wage garnishment. However, dismissal is not always automatic — if you missed a payment due to temporary hardship, your attorney can typically file a motion to modify the plan or request a temporary hardship discharge in extreme circumstances.

When Chapter 13 Is Better Than Chapter 7

Chapter 13 is often the better choice when you are behind on your mortgage and want to save your home, when you have significant non-exempt assets you want to keep, when you have tax debts or domestic support arrears that must be repaid, or when your income is too high to qualify for Chapter 7 under the means test. Your attorney will compare both options based on your specific financial situation.

Marathon Law Group can help you understand the full picture before you file. Our attorneys explain the difference between Chapter 7 and Chapter 13 clearly, help you calculate your options, and guide you through the process from start to finish.

Call Marathon Law Group — Las Vegas Bankruptcy Attorneys

Marathon Law Group helps Las Vegas residents understand and navigate Chapter 13 bankruptcy with clarity and confidence. With 45 years of combined legal experience, our attorneys know how to build a plan that protects your assets, addresses your priority obligations, and gives you a realistic path to financial recovery.

Call us today at (702) 522-1808 or contact us online for a free bankruptcy consultation. We also encourage you to explore the differences between Chapter 7 and Chapter 13 bankruptcy in Nevada to help you decide which path is right for your situation.

Marathon Law Group | 2012 Hamilton Ln, Las Vegas, NV 89106 | (702) 522-1808 | marathonlawgroup.com