Bankruptcy is governed by federal law in which a legal proceeding of a bankruptcy process is made. In Nevada, bankruptcy laws are made to help insolvent debtors, whether they are an individual or a corporation, to get debt relief. However, declaring bankruptcy is not a full-proof way to be debt-free. Some debts are deemed as non-dischargeable debts such as the following:
- Child support and alimony
- Student loans
- Fines and penalties for violating the law
- Tax debts
- Debts not included in your bankruptcy papers
Though the majority of the federal bankruptcy laws are similar to other states, there are some differences such as the exemptions when it comes to Nevada. Exemptions under the bankruptcy law allow certain property from being liquidated or collected such as your home or car. The amount of property you get to keep depends on the bankruptcy chapter you are going to file. You may keep more in a bankruptcy chapter 13 than in chapter 7. The most used exemptions in Nevada, about the Bankruptcy Code and the Nevada Revised Statute, are:
- Homestead – the law allows the real property or mobile home amounting up to $605,000 of equity. The debtor must record the homestead declaration before filing for bankruptcy along with the annuity contract proceeds to $350 per month and fraternal benefits to society.
- Personal property – includes burial plot or funeral service money held in trust, health aids, keepsakes and pictures, up to $5,000 of equity in books, art, musical instruments and jewelry, up to $12,000 of equity in home and yard equipment, income tax refunds, personal injury awards, escrow and mortgage impound accounts, and future compensation for support.
- Motor vehicle – Motor vehicles have equity of up to $15,000 or unlimited equity if the motor vehicle is equipped for a person with a disability.
- Public Benefits – are an aid to the blind, aged, disabled, worker’s compensation, public assistance for children, unemployment compensation, and vocational rehabilitation benefits.
- Wild card – allows you to keep any personal property of up to $10,000.
There are many more kinds of exemptions available to protect specific property. Since the law is ever-evolving, Nevada updates its exemptions from time to time hence, consulting with a Las Vegas bankruptcy lawyers before you file for bankruptcy is recommended if you are looking for a specific exemption.
Types of Bankruptcy
- Chapter 7 – is a bankruptcy process also called liquidation because you will need to get a bankruptcy trustee who will collect your assets and sell them. The proceeds are then going to be used to pay off your creditors along with a commission for the trustee for overseeing the process. Earlier, it was stated that not all debts can be removed upon the bankruptcy filing. Usually, those who avail of Chapter 7 are riddled with large credit card debts and other unsecured bills when they have no assets. In most cases, this kind of bankruptcy can completely discharge all these debts.
- Chapter 13 – on the other hand, is where the debtor proposes a repayment plan to the creditors that may last up to three to five years, paying off parts or all of the debt through the debtor’s future income. A Chapter 13 bankruptcy is often used to prevent the foreclosure of homes, stop repossessions of cars, income taxes, and stop the interest from further accruing while getting to keep certain property. To avail of this chapter, you need to have a regular source of income and some other disposable income which you will use for the repayment or reorganization plan.
How to File Bankruptcy
Filing bankruptcy requires several steps that you should follow including:
- Credit Counseling – the 2005 Bankruptcy Act mandates everyone who wants to file for bankruptcy undergo credit counseling within six months in a credit counseling agency before filing a bankruptcy petition and complete a financial management course after filing bankruptcy.
- Means Test – is also required for individuals to accomplish. Means tests are used to determine whether a person is eligible to avail of bankruptcy or not. To pass the test, your average income must be below the median income in Nevada. If your income exceeds the median, you will need to undertake further tests to see if you can apply for bankruptcy.
- Automatic Stay – after you have gathered the necessary paperwork and filed bankruptcy to the bankruptcy court, an automatic stay will immediately take place. It is a form of bankruptcy protection that prevents creditors from harassing, making direct contact, or staking a claim on your property.
Should I hire a bankruptcy lawyer?
If you are looking for a debt lawyer or are considering a declaration of bankruptcy, hiring an affordable bankruptcy lawyer will be of great help to you in making the best possible decisions that you may take. We at Want A Fresh Start will provide you with our experienced bankruptcy attorneys to discuss options available to you, discuss the pros and cons of each option, lay down possible bankruptcy alternatives, and many more. Call us now for a free legal consultation!