What Are Nevada’s Bankruptcy Laws?
If you’re thinking about filing for bankruptcy in Nevada, you may have heard that Federal law dictates the bankruptcy process. While it is true that the bankruptcy code itself is Federal law, certain state-specific laws in Nevada may apply to your bankruptcy case and, more importantly, could make the bankruptcy process much easier for you. If you would like to learn more about how bankruptcy works in the Silver State, contact a Las Vegas bankruptcy lawyer.
Nevada’s Homestead Exemption
In 2021, Nevada increased its homestead exemption from $550,000 to $605,000. In other words, Nevada law can protect up to $605,000 of your home’s equity in bankruptcy. For example, if you own a home worth $500,000 with a mortgage of $300,000, then the home’s equity is $200,000 and Nevada’s homestead exemption may completely protect the home from being sold, even in a Chapter 7 bankruptcy where assets are liquidated. The State Bar of Nevada notes that individuals filing for Chapter 7 bankruptcy rarely have to worry about selling their homes.
On the other hand, if you own a home worth $1 million with no mortgage and file a Chapter 7 bankruptcy, the home can be sold by a trustee to pay creditors, and creditors would only have the right to collect a maximum of $395,000. You could use the remaining $605,000 to purchase a new home, ensuring you always have a roof over your head. But Nevada law requires the new home to be purchased within a specific amount of time for the exempt equity to remain protected, which is why it’s important to speak with an experienced Las Vegas bankruptcy lawyer if you own a home and are considering bankruptcy.
The Motor Vehicle Exemption
Another Nevada-specific exemption is for motor vehicles. You can generally keep your vehicle if your equity is $15,000 or less. Equity is the value of the vehicle minus any amount still owing on it. Nevada’s vehicle exemption helps ensure you have reliable transport for work and family commitments. If you own a vehicle worth more than the exemption, the vehicle may be sold in a Chapter 7 bankruptcy, or you may need to file a Chapter 13 bankruptcy to keep the vehicle and make payments to creditors over time. Either way, you should always have access to transportation during bankruptcy in Nevada.
Nevada’s Personal Property and Wildcard Exemptions
Nevada law also provides exemptions covering many common types of property most people own. In fact, the Nevada Bar notes that most people who file for Chapter 7 bankruptcy do not have assets above the allowable exemption limits. For instance, an individual in Nevada can protect $12,000 in value of their household goods, furnishings, and appliances, $5,000 in value of jewelry and musical instruments, and $1,000,000 in value of funds held in qualified retirement accounts. Additionally, Nevada law provides a $10,000 “wildcard exemption” that can be applied to the value of any personal property not otherwise protected by the other Nevada exemptions.
When you combine all these exemptions and the homestead exemption, the chances of liquidating any assets in a Chapter 7 bankruptcy are quite low. It is no wonder that the Nevada State Bar calls the nickname for Chapter 7 bankruptcies—liquidation bankruptcies—a “misnomer.”
Can a Las Vegas Bankruptcy Lawyer Help Me?
A Las Vegas bankruptcy lawyer may be able to help you gain a better understanding of these state-specific laws in Nevada. It is all too easy to focus entirely on Federal law during the bankruptcy process, but these laws only represent part of the overall equation. Contact Larson & Zirzow today to learn more about how applicable state laws can protect your assets in bankruptcy.
Source:
nvbar.org/for-the-public/find-a-lawyer/lrs/bankruptcy-and-debt/