Fry the bacon in a skillet over medium heat until crisp. Remove the bacon from the skillet and drain.
Add the onion and green pepper to the bacon drippings in the skillet and cook until tender. Add the rice and cook until golden. Stir in the ground chuck and garlic and cook until the beef is almost done.
Stir in the water, tomato sauce, and chili powder. Bring to a boil. Then reduce the heat and simmer for 20 minutes.
Transfer half of the meat mixture into a 2-quart casserole dish. Sprinkle with half of the cheddar cheese, and then add the remaining meat. Top with the rest of the cheese and the bacon.