FILING BANKRUPTCY IN NEVADA

While Nevada is known for tourists and casinos, most of the state is dotted with small communities in economic crisis.  Many look to bankruptcy for the answer.

 

Bankruptcy is a very serious legal means to relieve debt.  Personal bankruptcy filings in the state are up 38% while business filings jumped up 44%.  With an increasing number of failing businesses and potential home foreclosures, some residents in one of the fastest growing states in America are having to ask "should we file for bankruptcy?".

 

Before you decide to file for bankruptcy in Nevada, you should know the facts.  Not every debt will be relieved by filing bankruptcy.  Most student loans, taxes owed, child support, and alimony will not be affected by a bankruptcy order.  You will still be responsible for those debts.  Any large debts incurred within 160 days of the filing will not be included.  You can't just purchase a new car, then file bankruptcy to relieve the debt.  It's called fraud and it's illegal.  There are many chapters to the federal bankruptcy laws but most people will fall under one of four main chapters.  Preview the information on each chapter and speak with an attorney if you feel bankruptcy is a good option for your needs.  All who file a bankruptcy petition will be subject to attending credit counseling with an approved agent to prevent credit issues after the bankruptcy is resolved.

 

Bankruptcy can be very appealing to those swimming in debt.  It can be a fresh start.  Once a petition is filed creditors must cease legal actions (including foreclosure), wage garnishments, and collection calls.

 

 

Chapter 7: there are two types of chapter 7 bankruptcy, voluntary and involuntary.  Voluntary means you as the debtor filed the petition for liquidation and relief of your debts.  Involuntary is when your creditors file a petition with the court to have your assets liquidated to recover the money loaned to you.  Chapter 7 has specific income restrictions to prevent fraudulent abuse of the bankruptcy laws.  You must fall below the state median income level to qualify.  A means test will be applied to your income and living expenses to determine if you qualify for liquidation.  Most people to qualify for chapter 7 have little or no valued assets such as a home.  When filing a chapter 7 bankruptcy petition, you will be expected to provide a list of your debts, creditors, and assets.  A court appointed trustee will seize any valuable assets, sell them at the highest price possible, and distribute that money to your creditors.  Then debts are then discharged.  You will be allowed to keep certain amounts of items, such as work related tools or supplies, family photos, clothing, and some household items.  The chapter 7 is sometimes called the "clean slate" because you will owe nothing to a creditor once it has been resolved.

Some items cannot be relieved by any bankruptcy: child support, alimony, student loans, and tax debt cannot be discharged.  You will still be subject to those payments.

 

 

Chapter 12: is solely for the commercial family farmer or fisherman business.  There are very strict debt limits as well as income tests that must be passed.  At least 50% of your debt must come from the business and a gross income test will determine eligibility.  If you own a commercial farm, contact a chapter 12 attorney for more information and qualification requirements.

 

Chapter 13: can relieve debt through a repayment plan.  Many who do not meet the chapter 7 income limits or who have assets they wish to protect will file a chapter 13.  You will still be expected to list your debt, creditors, and assets.  A court appointed trustee will be assigned to you and will act as an agent between you and your creditors.  You will be expected to make a payment plan based on your income level and living expenses that will last 3 to 5 years.  Once the trustee and creditors approve the plan you will make payments directly to the court trustee who will then distribute the payments amongst your creditors.  You will no longer have any communication with the creditors, and they must accept the terms of the plans once it is approved.  This can significantly reduce your monthly payments and in the case of a mortgage, allow for past due payments to be added to the end of the loan making your current payments lower while you are under the bankruptcy protection.  If you are in danger of a foreclosure, a bankruptcy can "stay" the foreclosure, but only if you file the bankruptcy petition before the lender files the foreclosure paperwork.

 

 

Chapter 11: is only for businesses.  Most corporations that file chapter 11 will be allowed to run the business while under supervision of a court appointed trustee.   The purpose of chapter 11 is to allow the business to restructure.  Most small or family-owned businesses will not qualify for chapter 11, due to the high amount of qualifications and other variables.  But if you own a business and would like more information on chapter 11, seek an attorney who specialized in chapter 11 bankruptcies.  Most will offer the initial consultation for no cost to assess your individual situation.  Filing fees in Nevada for chapter 11 are $1,039.00.

 

As with any legal proceeding, bankruptcy is not to be entered into lightly.  Seek the counsel of an experienced attorney to determine which if any chapter of bankruptcy you will qualify for and which would be best based on your assets and income.  For more information, see the Nevada Bankruptcy court website.

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