Nevada Bankruptcy Laws – How to Get Debt Relief

The Las Vegas bankruptcy process can provide you or your business immediate debt relief from creditors and allow you to “start over.” And with Nevada’s generous bankruptcy exemption laws, you may be able to keep most if not all of your assets while wiping out much of your debt.

In this article, our Las Vegas bankruptcy attorneys answer these faqs:

• 1. Will filing for bankruptcy in Las Vegas get rid of my debts?
• 2. How does chapter 7 bankruptcy work?
• 3. How does chapter 11 bankruptcy work?
• 4. How does chapter 13 bankruptcy work?
• 5. What is the Nevada bankruptcy process?

1. Will filing for bankruptcy in Las Vegas get rid of my debts?

Filing for bankruptcy in Nevada puts an automatic stay on your creditors from pursuing payment while your case is open. And depending on your particular bankruptcy case, you may be able to get out of paying for some if not all of your unsecured debts such as:

• credit card debts
• medical bills
• utility bills

However, the following types of debts typically cannot be discharged in bankruptcy:

• alimony payments
• child support payments
• student loans
• criminal debts
• most tax debts
• casino markers (unless the criminal case gets dismissed)
• debts not listed in the bankruptcy petition
• secured debts, such as mortgages or auto loans¹

Note that it may be possible to avoid bankruptcy through commercial debt restructuring.

Chapter 7 and chapter 13 are largely for consumer bankruptcy, while chapter 11 is largely for commercial bankruptcy.

2. How does chapter 7 bankruptcy work?

You should be eligible for chapter 7 bankruptcy in Nevada as long as you pass “the means test.” In general, this is when your income is below Nevada’s median income or if your disposable income is too low to pay your debts.

After filing chapter 7, the court will appoint a case trustee to liquidate your non-exempt assets to pay your creditors. The following is a non-exhaustive list of Nevada bankruptcy exemptions (property you get to keep):

• Up to $605,000 in home equity (“homestead exemption”);
• Up to $15,000 in automobile equity (“motor vehicle exemption”);
• Up to $10,000 of personal property of your choosing (“wildcard exemption”);
• Up to $5,000 in art and jewelry;
• Up to $12,000 in appliances, electronics, furniture, clothing, household goods, and home and yard equipment;
• Public benefits;
• Income tax refunds

Then once the bankruptcy case is over and your creditors receive their share of your liquidated non-exempt property (if any), your unsecured debts should be discharged. And these creditors may no longer initiate wage garnishments or repossessions of your property.

Note that filing for bankruptcy can pause home foreclosure, but it will not prevent it unless you stay current on your payments. In many cases the bankruptcy trustee will sell your home and pay the mortgage lender whatever is left over after deducting the exemption amount.

Also note the total chapter 7 filing fees in Nevada are $335. And chapter 7 cases remain on your credit report for 10 years and will cause your credit score to plunge.²

3. How does chapter 11 bankruptcy work?

Businesses that file for chapter 11 bankruptcy in Nevada get to remain open and operational while implementing a court-approved reorganization plan and loan modification. Through this internal restructuring, businesses have the opportunity to pay creditors while continuing to earn revenue.

Any business is qualified to file for commercial bankruptcy through chapter 11. But small business owners who wish to take the more streamlined, cheaper chapter 11 approach under the Small Business Reorganization Act cannot have debts exceeding $3,024,725.

Throughout the chapter 11 process, the business must file monthly reports, pay quarterly fees, and stay current on payments as outlined in the reorganization plan. A U.S. trustee oversees the entire process. Then once the case is over, any unsecured debts should be discharged.³

4. How does chapter 13 bankruptcy work?

Filing for chapter 13 bankruptcy in Nevada is the only realistic way for individuals or married couples to keep their home. Instead of having your non-exempt assets liquidated like in chapter 7 cases, chapter 13 proceedings allow you to repay your debts in accordance with a court-approved repayment plan.

Since chapter 13 requires you to stay current on a payment plan, it is only doable if you have a steady income source. Otherwise, your only other choice may be chapter 7 bankruptcy proceedings.

Chapter 13 bankruptcy filing fees amount to $310, and cases typically last three to five years. Once the case ends, your unsecured debts are discharged. And your credit report will stop showing your chapter 13 case once seven years have passed.⁴

Las Vegas bankruptcy proceedings halt creditors’ collection actions while giving debtors a “fresh start.”

5. What is the Nevada bankruptcy process?

The paperwork and timelines involved in bankruptcy proceeding depend on whether you are filing for chapter 7, 11, or 13. But in general, the process involves these five steps:

1. Taking a court-approved credit counseling class.
2. Filing the proper bankruptcy forms with the U.S. Bankruptcy Court, District of Nevada, including a schedule of all your assets and debts, including cash, real estate, liens, etc. At this point, your creditors are stayed from pursuing payment.
3. The court appoints a case trustee to oversee the liquidation or repayment plan (in chapter 7 and 13 cases). There is usually a creditors meeting where you answer questions under oath.
4. The court holds a confirmation hearing to approve a chapter 11 or chapter 13 repayment plan, and you must make regular payments to creditors. In chapter 7 cases, the trustee pays your liquidated non-exempt assets (if any) to creditors.
5. Then once the case ends, all unsecured debts should be discharged.

The Nevada bankruptcy process is complicated, confusing, and time-consuming, especially since it takes place in federal court – which is a lot more formal and strict than state court.

Therefore, anyone considering bankruptcy should consult with an experienced Las Vegas bankruptcy attorney who knows the ins and outs of the bankruptcy code and the Nevada Bankruptcy Court. Skilled Nevada bankruptcy attorneys fight to safeguard as many of your assets as possible while eliminating as much of your debt as possible.⁵

Seeking to get out of overwhelming debt by filing bankruptcy? Contact our Las Vegas bankruptcy lawyers today. Our bankruptcy law firm has years of experience providing legal services throughout the state, from Henderson and Summerlin to Laughlin and Reno.

Our Las Vegas, NV law office provides not only bankruptcy services but also criminal defense and personal injury. Our Las Vegas office also offers referrals to clients with estate planning or business law needs.

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