People overwhelmed with debt often fear the mere mention of bankruptcy because they feel it means losing everything and carrying the stigma of failure with them going forward. In truth, bankruptcy generally allows you to keep the essential tools of living, including your home, car, furnishings, and retirement savings while giving you a clean financial slate to move forward with.
Throughout Nevada, 7,781 individuals, families, and businesses in 2020 filed for bankruptcy under Chapters 7, 11, and 13 of the bankruptcy code in order to get a fresh start. Through the first two months of 2021, according to court records, another 1,113 persons have opted for the same route to financial recovery.
In these uncertain times — with the pandemic throwing many individuals and businesses into financial straits — if you’re falling behind on your payments and the phone is ringing constantly with debt collection calls, you should consider bankruptcy as a legitimate option.
If you live in Reno, Carson City, or even Las Vegas, contact the Law Office of Scott N. Tisevich to explore your options.
For individuals, families, and some businesses, you essentially have three bankruptcy options if you wish to discharge your debts:
Chapter 7 bankruptcy is based on liquidation. When you file for Chapter 7, you will submit a list of all of your assets, and the bankruptcy trustee will begin to sell off — or liquidate — any assets you have that are considered not exempt under Nevada law. To use this chapter of the bankruptcy code, your income, based on household size, must fall below certain legislated maximums. Generally, you can keep your car and your home based on the state-authorized exemptions listed in the section below. You can be discharged from some or all of your unsecured debts in as few as 90 days.
Chapter 13 bankruptcy allows you, based on your income, to consolidate your unsecured debts into one sum, often at a reduced value, which you can then pay back over a three- to five-year period. You can retain some of your secured possessions, such as cars and homes, so long as you meet all of your monthly obligations.
There are debt limits, however. Unsecured debts such as credit card bills and medical bills cannot exceed $419,275 — and secured debt (cars, homes, etc.) cannot exceed $1,257,850. Since this option is based on having enough income to pay back your debts, it is often referred to as the “wage earner” option. You are discharged from bankruptcy when you’ve paid the consolidated debt in full.
Similar to Chapter 13, Chapter 11 is a reorganization plan, but instead of being formalized by a bankruptcy trustee, the debtor creates the reorganization plan and submits it to creditors for approval. Chapter 11 allows you to retain all of your assets so long as your plan is approved and you make your payments as promised. Unlike Chapter 13, Chapter 11 has no asset limits.
There is a means test for each type of bankruptcy. For instance, if you earn more than $53,731 annually as an individual living alone, you cannot file for Chapter 7. The limit rises about $9,000 for every other person living in your household, so for a household of four, the limit is $83,831 annually.
Nevada also requires that you be a resident of the state for at least 730 consecutive days before filing. You will also need to undergo credit counseling and submit a certificate of completion to qualify for bankruptcy protection.
Once you file under any of these chapters, the bankruptcy court will place what is called an “automatic stay” on all debt collection efforts. This means your creditors can no longer contact you to demand payment. It also places a temporary halt on foreclosure proceedings, but your creditors can petition for this to be lifted. If your home is in foreclosure, you will need to arrange a plan to honor your obligations, or the lender can foreclose. The stay will give you some time to work out an arrangement to potentially keep your home.
Under Nevada bankruptcy law, you are entitled to fairly generous exemptions for personal belongings, retirement savings, and other benefits. Equity in your home, for instance, is protected up to $605,000. This means if you have a home valued at $800,000 and owe $200,000 on it, you can keep your home under Chapter 7 without facing liquidation. Before filing, however, you will need to file for a homestead exemption.
The point to remember here is that the exemptions are based on equity, not necessarily on retail or resale value. Some examples include:
A car can be exempted up to $15,000 in equity
Books can be exempted up to $5,000
Appliances can be exempted up to $12,000
Tools of your trade can be exempted up to $4,500
There is also a wildcard exemption of $10,000 for any personal property you choose. It’s also important to note that a married couple can double these exemptions.
You also get to retain all federally protected retirement accounts, Social Security payments, and other specified government benefits, including workers’ compensation, public assistance, and unemployment compensation.
Though you can discharge most unsecured debts through bankruptcy while retaining secured debt possessions if you qualify, bankruptcy will not allow you to discharge most student loans, spousal or child support payments, taxes, and fines owed to the government, personal injury debts arising from a drunk driving charge, or any debt you left off your filing list or assumed after filing.
Filing for bankruptcy under any chapter of the code can be complicated. Choosing the best option for you can also be challenging. Don’t go it alone. You deserve to have an experienced attorney on your side to help you pursue the financial freedom you need to move forward. Attorney Scott N. Tisevich has devoted his entire legal career to helping individuals and businesses navigate the bankruptcy process and attain the fresh start they deserve. Call or reach out today to schedule a free case consultation.
If you or someone you know is considering filing for bankruptcy, you’re not alone. Bankruptcy attorney Scott N. Tisevich has the knowledge and experience you need to explore all of your options so that you can take your first step toward a financial fresh start. If you’re facing financial difficulties that are getting out of control and you live in Reno, Carson City, Las Vegas, or anywhere else in Nevada, contact the Law Office of Scott N. Tisevich today for legal counsel and guidance.