Nevada Bankruptcy Exemptions and Law

If you are deeply in debt and have creditors calling you every day, bankruptcy may offer a solution to your debt problems. Filing for bankruptcy stops all collection efforts and gives you the breathing room you need to either pay off your debt or eliminate it entirely. In addition, Nevada has enacted its own rules on the property you can keep after you file for bankruptcy.

Nevada is an “opt-out” state for bankruptcy filing exemptions. Nevada debtors filing bankruptcy must use the Nevada exemptions. These let you keep your home and most of your property up to a certain dollar amount. The U.S. Bankruptcy Code provides exemptions in other states under federal law.

Nevada’s Bankruptcy Exemptions

Nevada bankruptcy offers certain protections. Creditors cannot seize your exempt property during bankruptcy. Married couples may both claim a full set of exemptions for any joint property. That often lets couples double their exemptions. Let’s take a closer look at some of the exemptions provided by Nevada.

Homestead Exemption

Unlike some states, Nevada does not have an automatic homestead exemption. To protect their equity from creditors and judgments, homeowners must file a homestead declaration with the county recorder’s office. A “homestead” is your primary residence and may be your house, mobile home, or condo. To receive the full exemption, you must live in the residence for at least 1,215 days (just under three-and-a-half years). If you don’t meet the requirement, you’re subject to the federal homestead cap instead.

Nevada’s homestead exemption is currently $605,000 of your home equity. The exemption does not protect against foreclosure, tax debt, or mechanic’s liens.

Other Nevada Exemptions

Nevada’s protections extend beyond the home. You can file for bankruptcy in Nevada if you have lived there for at least 180 days. To be eligible for Nevada’s property exemptions, you must have resided in the state for at least 730 days (two years). If you fall between those two periods, you can file in Nevada, but must use the exemptions from your previous state of residency.

• Motor Vehicle Exemption (Nevada grants a $15,000 exemption for motor vehicles and a 100% exemption for vehicles retrofitted for disabled individuals, but you may only exempt one vehicle)
• Up to $12,000 in household goods, appliances, furniture, and other personal property
• Up to $10,000 in “tools of the trade”
• Life insurance, pensions, retirement plans, and Social Security and other public benefits
• Wage exemptions of up to 75%

The state of Nevada also has a $10,000 wildcard exemption for other property.

Types of Bankruptcy

Most individual debtors will file either a Chapter 7 or Chapter 13 bankruptcy. Both types begin with an automatic stay. This immediately halts all collection efforts, wage garnishment, and repossession attempts. Let’s examine the differences between the two types.

Chapter 7 Bankruptcy

In a Chapter 7, or liquidation bankruptcy, a bankruptcy trustee sells your non-exempt property to pay your secured creditors. To file, you must pass a means test. If your income falls below the median annual income for your area, you automatically qualify. Otherwise, you must show that you have no disposable income after meeting your living expenses. The U.S. Department of Justice adjusts the median income annually.

To file for a Chapter 7 bankruptcy, you must also:

• Complete a credit counseling course before filing

• Pay the federal filing fee ($338, which you can waive if you make less than a certain amount)

• Complete a financial management course

Chapter 7 is mainly for those who have little hope of paying much of what they owe.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, creditors work with the trustee to develop a repayment plan. You will need to repay your creditors in installments over a three- to five-year period. As long as you stay current on your payment plan, the automatic stay remains in place. At the end of the repayment period, the court will discharge any deficiencies owed to your creditors.

Chapter 13 bankruptcies allow debtors with regular incomes and substantial assets to keep their property and repay their debts. The automatic stay and repayment plan allow debtors to clear unsecured debts that have caused them to fall behind on their mortgage payments and catch up again.

Dischargeable and Non-dischargeable Debt

Both Chapter 7 and Chapter 13 allow you to clear dischargeable debts and pay off your secured debtors. Some types of debt cannot be discharged in bankruptcy. Non-dischargeable debt includes:

• Court-ordered payment arrearages for child support, alimony, or spousal support
• Student loans
• Some tax debts
• Mortgages and other secured loans (A Chapter 13 plan allows you to reorganize these debts)

Dischargeable debts include:

• Medical bills
• Credit card bills
• Unsecured personal loans

Some types of tax debt may be dischargeable in bankruptcy. A bankruptcy attorney can advise you on how to inquire about these debts and how to include them in your bankruptcy petition.

Get Legal Advice From a Nevada Bankruptcy Attorney

The personal bankruptcy process is difficult for those without any legal experience. Nevada courts use local bankruptcy filing rules, so the assistance of a Nevada bankruptcy lawyer is essential. Your attorney can prepare the filing documents for you and defend your interests throughout the bankruptcy process. A lawyer can also ensure your bankruptcy case proceeds smoothly and that you can discharge as much debt as the law allows.