When Is Bankruptcy in Nevada Not a Good Idea?
Debt collection in Nevada
Debt is a legal obligation that requires one party, the debtor, to pay another party, the creditor, money, or other agreed-upon value. When Nevada citizens refuse to settle their obligations, creditors (those who are owed the money) will contact them via phone calls and letters. If those efforts go unanswered, they have only one option for enforcing collection: the court system. The creditor has the option of filing a claim in court for the amount owed; the court in which the lawsuit is filed differs by county. Many small claims courts, for example, allow debts of up to $10,000 to be litigated. Claims for more than $10,000 may be filed in district court. Each court has its own set of rules to follow.
If the judge determines in favor of the creditor, regardless of which court handles the case, a judgment will be filed stating how much money the borrower must pay. The creditor can then use the judgment to recover the debt via a variety of legal options. There are exceptions to what the creditor can and cannot collect for the money, such as garnishing your salary or attaching your personal property.
When Is Bankruptcy in Nevada Not a Good Idea?
When you’re in debt, bankruptcy under Nevada law can provide you with powerful safeguards. Regrettably, it isn’t appropriate in all situations. There are various circumstances in which you should not make a claim because it may cause more harm than benefit.
For example, you can’t use it to eliminate Nevada child support and alimony payments, and it normally won’t help with student loan payments. While you may be able to get your student loans discharged if you can prove that repaying them would cause you “undue hardship,” this is a nearly impossible threshold of fulfilling that only a few people can meet.
Bankruptcy isn’t the best option for dealing with secured debts because it doesn’t remove the liens that lenders hold on your property. While paying off debts frees you from having to pay them, if the debt is secured by collateral, the creditor can still collect it after your case is finished.
When the majority of your debts aren’t dischargeable, bankruptcy is usually a poor choice for resolving your financial difficulties. In most circumstances in Nevada, the benefits of filing outweigh the drawbacks. However, if filing doesn’t improve your financial circumstances, the negative consequences aren’t worth it.
Why Can It Be Bad For You?
When bankruptcy can help you get rid of your debts, it’s worth the initial damage to your credit score. However, if your financial issues are caused by nondischargeable debts, the impact on your credit might be severe, making bankruptcy a poor choice.
A Nevada Chapter 7 filing will stay on your credit record for ten years from the date you submit your petition with the court, while a Chapter 13 case will stay on for seven years. While the impact on your credit score will diminish over time, if you can’t afford to repay your nondischargeable debts once your case is closed, the harm to your credit score will certainly outweigh any benefits. A poor credit score can also make it difficult to obtain loans.
Is Chapter 7 Bankruptcy Right for You?
Many people have turned to bankruptcy as a means out of unmanageable debt, but there are occasions when this is a horrible idea. You should discuss your debt situation with an experienced Nevada attorney to see if it’s the best alternative for dealing with your financial problems. While bankruptcy relief is a good opportunity to start over, it isn’t right for everyone.
Most types of debt will be removed if you file for Chapter 7 bankruptcy protection in Nevada. After you’ve been discharged, you won’t have to worry about:
- Most medical bills
- Credit card debt and unsecured lines of credit
- Unsecured personal loans
- Checking account overdrafts
- Past due utility bills
- Certain types of tax debt
Unfortunately, Not Every Debt Can Be Eliminated
There are some debts that are not dischargeable. Filing Chapter 7 may not be sufficient for those who owe some types of student loans, some tax bills, child support or alimony, marital settlements, criminal restitution, court-ordered fines, or debts obtained via fraud or false pretenses. In most circumstances, however, filing bankruptcy to discharge dischargeable debts can bring significant relief, allowing consumers to have more money to pay off non-dischargeable bills.
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.