What Property Can I Keep in a Nevada Chapter 7 Bankruptcy?
Contrary to what you might think, filing for bankruptcy does not mean losing everything you own. In fact, the purpose of bankruptcy is to ensure that people are not left without means of supporting themselves while they work to rebuild their finances and eliminate debt. For that reason, someone who files for Chapter 7 bankruptcy in Nevada can take advantage of certain “exemptions” designed to protect their income and many types of property from their creditors.
How Bankruptcy Exemptions Work in Chapter 7 Cases
In general, a Chapter 7 bankruptcy involves a court-appointed trustee taking possession of a debtor’s assets, liquidating those assets, and using the proceeds to pay the debtor’s creditors. However, if an asset is “exempt” it cannot be sold by a trustee as part of the liquidation process. In the majority of Chapter 7 cases, all of the debtor’s assets are exempt and there is nothing for the trustee to liquidate. The debtor then receives a discharge from the Bankruptcy Court, relieving them of any obligation to repay discharged debts while retaining ownership of exempt property.
The Bankruptcy Code provides a default set of bankruptcy exemptions, but each state may choose to adopt its own exemptions for their residents to use. If you’ve lived in Nevada for the 730 days prior to filing for Chapter 7, you must use Nevada’s bankruptcy exemptions, which are some of the most generous exemptions in the United States. If you haven’t lived in Nevada for at least 730 days, you may need to use exemptions from a state where you previously lived, or the federal exemptions, depending on your circumstances.
Nevada’s Homestead and Motor Vehicle Exemptions
If you have equity in your home, Nevada’s most important exemption is the homestead exemption. Nevada allows you to exempt up to $605,000 worth of equity in the real property or mobile home you own and use as your primary residence. Even if your home is worth more than $605,000, a Chapter 7 trustee generally will not try to sell the home if the equity (the home’s value minus any amounts owing on a mortgage) is within the limit of the homestead exemption.
Along similar lines, you can keep a vehicle with up to $15,000 in equity. Again, equity is the vehicle’s value minus amounts owing on a car loan. Keep in mind that bankruptcy does not eliminate loans secured by your house or car. So, if you don’t want to lose your home to foreclosure or a car to repossession, you must remain current on your payment obligations.
Personal Property, Retirement, and Wildcard Exemptions
Nevada law provides many other generous personal property and other exemptions. For example, you can exempt up to $12,000 worth of household goods, such as furniture, kitchen appliances, and clothing. (This exemption doubles if you are married.) You can protect up to $1,000,000 held in qualified retirement accounts. There are exemptions protecting certain amounts for earnings, jewelry, tools used in your trade or business, and even life insurance and personal injury proceeds. There is also a $10,000 wildcard exemption you can apply to any personal property, which again is doubled if you are married.
Contact a Las Vegas Chapter 7 Bankruptcy Attorney Today
It is easy to become overwhelmed by debt and the fear of losing everything you’re worked so hard for. Filing for Chapter 7 bankruptcy can provide you with relief while still allowing you to keep much, if not all, of what you own. Our Las Vegas Chapter 7 bankruptcy lawyers for individuals are here to help. Contact Larson & Zirzow today at 702-382-1170 to schedule a complimentary consultation.