Personal Bankruptcy FAQs — Get Answers to Your Biggest Questions From Our Las Vegas Bankruptcy Lawyers

When you’re thinking about filing for bankruptcy, it’s normal to have questions, sometimes dozens of them. At Larson & Zirzow, our Las Vegas bankruptcy lawyers believe good advice starts with good information. Here are answers to some of the most common questions we hear from people in Las Vegas who are considering personal bankruptcy.

What is the process of Chapter 7 bankruptcy?

Chapter 7 is the most common type of bankruptcy for individuals. It’s designed to wipe out most unsecured debts, like credit cards and medical bills, quickly and permanently.

In Nevada, the process starts by filing a petition with the U.S. Bankruptcy Court for the District of Nevada that includes key information about your personal financial situation. Once you file your petition, the Automatic Stay goes into effect immediately. This stops collections, lawsuits, garnishments, and creditor harassment. A trustee is assigned to your case to review your paperwork and determine whether you have any non-exempt assets that could be sold to repay creditors.

Most people who file Chapter 7 don’t lose any of their property because Nevada’s exemptions protect essential assets like your home equity, vehicle, household goods, and retirement accounts. About 30 to 45 days after filing, you’ll attend a short Meeting of Creditors (also called a 341 meeting). If there are no objections or complications, your eligible debts will be discharged about 3–4 months after you file.

What is the process of Chapter 13 bankruptcy?

Chapter 13 is different from Chapter 7 because instead of wiping out debts immediately, you propose a repayment plan lasting three to five years. During this time, you make regular monthly payments to a court-appointed trustee, who disburses the money you pay under your plan to your creditors according to the plan.

The Chapter 13 process is similar to Chapter 7 in that it includes filing a petition and attending a brief meeting with the bankruptcy trustee. Like Chapter 7, you will complete a Means Test, but not to determine eligibility to file. Unless your assets or debts exceed certain limits, you’ll likely qualify to file for Chapter 13.

Chapter 13 is especially useful if you’re behind on your mortgage or car loan and want to catch up without losing your property. It’s also helpful if your income is too high to qualify for Chapter 7 under the Means Test, or if you have non-exempt assets you want to keep.

When you finish your plan, any remaining eligible unsecured debts are discharged. Many people find that Chapter 13 gives them breathing room, stops foreclosure, and helps them reorganize their finances in a manageable way.

What is the Meeting of Creditors like?

The Meeting of Creditors, also called the 341 Meeting after its section in the Bankruptcy Code, sounds intimidating, but it’s usually quick and straightforward. It’s a short meeting (maybe only five to ten minutes) with the bankruptcy trustee where you’ll answer a few simple questions under oath about your finances and your bankruptcy paperwork. These days, the meeting is most often held via videoconference (Zoom), and we’ll join the call with you whether you dial in from our office or your own location.

Creditors have the right to attend the meeting and ask questions, but in most bankruptcy cases no creditors appear. Larson & Zirzow will prepare you ahead of time so you know exactly what to expect. We’ll make sure your paperwork is accurate, your answers are clear, and you feel confident heading into the meeting.

How does the Means Test impact Chapter 13?

Most people learn how the Means Test helps determine if you qualify for Chapter 7, but it also affects Chapter 13, not in terms of eligibility but regarding other aspects of your plan. If your income is above Nevada’s median income for your household size, meaning you “fail” the Means Test for Chapter 7, you’ll likely need to commit to a five-year repayment plan in Chapter 13 instead of a three-year plan. But, if you “passed” the Means Test for Chapter 7 but need to use the tools of Chapter 13 to catch up on a mortgage, a vehicle, or other payments, you can propose a three-year Chapter 13 plan.

The Means Test also helps calculate your disposable income, which affects how much you must pay to unsecured creditors. Larson & Zirzow carefully analyzes your Means Test numbers so you’re never forced to pay more than the law requires.

Can bankruptcy help avoid a lien?

Yes, bankruptcy can sometimes help you avoid or remove liens recorded against your property, including non-consensual judicial liens. A judicial lien happens when a creditor sues you, wins a judgment, and records that judgment as a lien against you or your real property in Nevada.

If that lien interferes with your ability to claim your full homestead exemption, you may be able to file a motion with the bankruptcy court to “avoid” or remove it. This can be done in both Chapter 7 and Chapter 13 cases. Lien avoidance is not automatic but requires filing a well-crafted motion in the bankruptcy court by your attorney.

Chapter 13 also offers tools like lien stripping and cramdowns that can help you get rid of second mortgages or reduce the amount you owe on assets like your car to the current value of the car rather than the full amount still owing under the contract. These tools are technical, but extremely powerful when used correctly. Our team looks for every opportunity to protect your property.

What happens to someone who cosigned a loan for me if I file for bankruptcy?

If someone cosigned a loan for you, like a car loan or private student loan, your bankruptcy will protect you from collection, but the cosigner is still on the hook for the debt.

In Chapter 7, creditors can go after the cosigner if you stop paying. Reaffirming the debt can protect the cosigner but comes at the cost of you remaining liable on the debt despite your discharge. Paying off the debt after discharge with money you saved from the bankruptcy is one way to protect a cosigner.

In contrast to Chapter 7, in Chapter 13 there is the Automatic Stay as well as a co-debtor stay, which protects cosigners from collections. As long as you keep up with the payments required under your repayment plan, creditors cannot go after your cosigner.

Some people want to pay off a cosigned loan to protect a friend or family member, but paying one creditor in full while paying others nothing can be considered a “preferential payment,” and the trustee might claw back that money, including directly from the friend or family member you paid, to collect and disburse it equally among creditors. If you want to protect a cosigner, it’s crucial to talk through your options with your attorney before you make any payments.

Will bankruptcy wipe out all my debts?

Bankruptcy is powerful, but it doesn’t erase every kind of debt. For example, child support, alimony, recent taxes, student loans (except in cases of a demonstrated undue hardship), and debts rsulting from fraud or intentional wrongdoing generally cannot be discharged.

At Larson & Zirzow, we’ll help you understand exactly what debts you can wipe out and what you may still need to pay afterward. The goal is always to get you as much relief as the law allows.

Can I file for bankruptcy more than once?

Yes. There’s no limit to how many times you can file for bankruptcy over your lifetime. But there are rules about how soon you can get another discharge. For example, if you received a Chapter 7 discharge, you generally must wait eight years before you’re eligible to receive another Chapter 7 discharge. You may be able to file Chapter 13 within four years after receiving a Chapter 7 discharge, or a Chapter 7 discharge within six years after receiving a Chapter 13 discharge, depending on the circumstances.

We help clients determine when they’re eligible, what options are realistic, and whether alternatives exist that might work better.

How do I know if bankruptcy is right for me?

The best way to find out if bankruptcy is right for you is to talk with an experienced bankruptcy lawyer who can review your whole financial picture, including your income, assets, debts, and goals, and help discuss all your real options. We offer a free 30-minute consultation by phone to answer your questions and let you know how we can help.

At Larson & Zirzow, we don’t push people into bankruptcy if it’s not the best fit. We look at alternatives like debt negotiation, workouts, or defending you in collection lawsuits. If bankruptcy is the right path, we plan it properly so you get maximum protection and the fresh start you deserve.

Your Questions, Answered

If you have more questions, you’re not alone. We’re here to help you get clear answers and a plan that makes sense for your life. Contact Larson & Zirzow today for a confidential consultation regarding bankruptcy in Las Vegas. Let’s talk through your concerns and get you on the path to real relief.