Chapter 7 Bankruptcy in Nevada
Chapter 7 bankruptcy
Chapter 7, also known as the ‘liquidation chapter,’ is utilized by individuals, partnerships, or businesses that have little possibility of improving their financial status. In Chapter 7, the debtor’s estate is liquidated under the rules of the Bankruptcy Code. Liquidation is the process through which the debtor’s nonexempt property is sold for cash by a trustee, and the cash is distributed to creditors. (For more information, visit https://www.nvb.uscourts.gov/filing/filing-requirements/chapter-7/) or contact Nevada Chapter 7 Bankruptcy attorneys at Freedom Law.
Even though filing for Chapter 7 may provide a fresh start, debts are not simply forgiven. Many of the individual’s assets will be liquidated to settle debts with creditors in order to discharge these debts.
A bankruptcy estate is created when a Chapter 7 proceeding is started. The nonexempt portions of the debtor’s property are temporarily in possession of the bankruptcy estate. The bankruptcy estate’s nonexempt property will thereafter be liquidated and allocated to unsecured creditors to satisfy obligations.
The liquidation and distribution of the estate will be overseen by a court-appointed trustee.
Who can file for Chapter 7 in Nevada?
A Chapter 7 petition can be filed by an individual, corporation, partnership, or other business entity. This does not, however, imply that all individuals or businesses are eligible to file for Chapter 7.
An individual must first finish a pre-filing credit counseling course before filing for Chapter 7 bankruptcy in Nevada. The Department of Justice website has a list of approved credit counseling services in Nevada.
A means test is used in Nevada bankruptcy law to determine whether you are eligible for Chapter 7. The means test compares the individual filing for bankruptcy’s average household income to the average household income of Nevada citizens.
What property is exempt from Chapter 7?
When filing for Chapter 7 bankruptcy, it is critical that the individual accurately identifies exempt and nonexempt property. To pay off debts, exempt property will not be liquidated and distributed to creditors.
The exemption for an individual’s home is one of the most popular and important property exemptions in Nevada. This allows a person who files for bankruptcy to keep real estate worth up to $550,000 from being liquidated.
Some other common categories of exempt property include:
➤ life insurance proceeds
➤ health insurance proceeds
➤ tax-exempt retirement accounts
➤ public employee pensions
➤ IRAs (Roth and traditional) up to $1,171,150
➤ ERISA benefits up to $500,000
- Personal Property
➤ one gun
➤ pictures and keepsakes
➤ motor vehicles up to $15,000
➤ personal injury compensation up to $16,500
➤ up to $5,000 in works of art, jewelry, and musical instruments
➤ Up to $12,000 in appliances, furniture, and other home items
➤ a sum of money given as a kind of compensation for a wrongful death
➤ 50 times the federal minimum wage per week; or
➤ 75% of disposable weekly earnings
- Public Benefits
➤ disability assistance
➤ worker’s Compensation
➤ unemployment compensation
➤ alimony or child support payments properties
➤ security deposits for rental
➤ $1,000 of the individual’s choice of personal property
Under Nevada and federal law, there are further property exemptions. The application of state and federal property exemptions is contingent on a number of factors that are unique to each case.
What debts cannot be discharged under Chapter 7?
Even if a person or business is eligible to file for Chapter 7, not all types of debt are dischargeable. Several types of debt are dischargeable under state and federal law, notwithstanding the fact that many ordinary obligations can be dismissed under Chapter 7.
Non-dischargeable debts include the following:
- student loans
- alimony obligations
- child support obligations
- penalties and fines for violations of the law
- income tax debt for the previous three years
- debts for personal injury or death caused by DWI
- damage awards arising from intentional wrongful acts
- all other tax debts
Individuals who file for Chapter 7 bankruptcy are still responsible for debts that fall into the categories listed above. Additional debts may be non-dischargeable if the creditor rejects the individual’s discharge request. These are some of the debts:
- debt incurred on the basis of fraud.
- debts from embezzlement or larceny
- credit purchases of more than $1,150
- debts owed pursuant to a divorce settlement
- loans or cash advances of more than $1,150 taken within 60 days of filing
Does Chapter 7 bankruptcy affect my credit score?
Filing for Chapter 7 bankruptcy is a difficult but ultimately beneficial financial decision for many. Though Chapter 7 bankruptcy might help people get out of debt, it can have a detrimental impact on their credit score.
Bankruptcy will typically linger on an individual’s credit report for ten years. The impact of bankruptcy on a person’s credit score is determined by the type of bankruptcy and the person’s financial history prior to filing.
Despite the possible negative effects on credit scores, many people believe that filing for Chapter 7 will improve their financial situation in the long run.
CREDIT COUNSELING MUST BE OBTAINED PRIOR TO FILING BANKRUPTCY
In order to be excepted from filing the certificate of credit counseling, a debtor must either:
1. Submit a different certificate detailing extenuating circumstances that justify a waiver of the requirement, as well as stating that the debtor requested credit counseling but was unable to acquire it during the 7-day period preceding filing; OR
2. Request credit counseling in writing and notify the debtor that he or she is unable to do so due to incapacity, disability, or active military duty in a combat zone.
COPY REQUIREMENT: ORIGINAL PLUS ONE (1) COPY
The copy requirement numbers include the copy to be returned to the filing party. See Local Rules 1002 (a) (1) and 7010 (c) (1). The IRS has access to documents through the internet, so a copy is not required to be forwarded.
• Documents Required at Time of Filing (Minimum Filing Requirements)
• Documents Required with the Voluntary Petition or within 14 Days of Filing
• Documents due 7 days before the date first set for the §341 Meeting of Creditors
• Documents due within 30 days or by the date first set for the §341 Meeting of Creditors, whichever is earlier
• Documents due before the discharge is granted (Must be filed within 45 days after the §341 Meeting of Creditors)
(Read more at the United States Bankruptcy Court – District of Nevada website: https://www.nvb.uscourts.gov/filing/filing-requirements/chapter-7/)
Why do I need an attorney?
Even though Chapter 7 is one of the most basic types of bankruptcy, it still has a number of complex and nuanced legal requirements to meet. It’s critical to understand which assets are exempt from liquidation and which debts can and cannot be discharged. A bankruptcy attorney may just do the job of easing your worries and stress in filing for Chapter 7.
Freedom Law Firm is here to help.
Bankruptcy is often the last but necessary resort. It is a delicate and complex proceeding, and you want someone with plenty of experience to consult you and guide you through the process and help you determine the scope of the discharge.
In many cases, unless a party in interest files a complaint objecting to the discharge, the bankruptcy court may issue a discharge order relatively early in the case – generally, 60 to 90 days after the date first set for the meeting of creditors.If you would like to find out whether bankruptcy is the right option for you, please request a call-back by submitting a short online form. All initial consultations are free and confidential.