Chapter 7 bankruptcy law gives you a “fresh start” by allowing you to keep many of your assets while granting you debt relief. And once you file for bankruptcy, creditors and collection agencies can no longer hound you for payment.
In this article, our Las Vegas bankruptcy lawyers discuss:
- 1. What is chapter 7 bankruptcy in Nevada?
- 2. Am I eligible?
- 3. How does chapter 7 bankruptcy work?
- 4. Who is the case trustee?
- 5. Which assets are exempt?
- 6. How is chapter 7 different from chapter 13?
- 7. Will my credit score go down?
- 8. Can casino markers be discharged in bankruptcy?
- 9. How much does filing for chapter 7 cost?
- 10. How long does the process take?
1. What is chapter 7 bankruptcy in Nevada?
Filing for chapter 7 bankruptcy allows a court-appointed bankruptcy trustee to:
- Inventory your financial situation;
- Determine which assets are exempt from bankruptcy; and
- Sell your non-exempt property (if any) to pay your creditors.
Common types of debts that get discharged in bankruptcy include unpaid medical bills, credit card bills, court judgments, and other unsecured debts. But child support, alimony payments, tax debts, and student loans are not dischargeable debts in bankruptcy.
Once your debt is discharged in chapter 7 bankruptcy, the debt is gone. And in general, your creditors can no longer:
- Sue you for what you owed;
- Pursue wage garnishment or bank account garnishment;
- Send you harassing letters; and
- Make harassing phone calls to you.
This is true even if your creditors ended up receiving little – or no – money on their claims against you. Legally, your creditors have to eat their loss.1
2. Am I eligible?
Typical candidates for chapter 7 bankruptcy in Nevada are individuals or married couples. You are disqualified from chapter 7 bankruptcy protection if either:
- A bankruptcy petition was dismissed in the last 180 days due to your willful failure to appear before the court or follow its orders;
- You voluntarily dismissed a previous bankruptcy case after creditors sought relief from the court to take property they held liens on;
- In the last 180 days, you did not take an approved credit counseling course. (But if the situation is an emergency or you were unable to get credit counseling, it might be possible to file bankruptcy without getting counseling first.)2
3. How does chapter 7 bankruptcy work?
Nevada’s chapter 7 bankruptcy process proceeds as follows:
- You file a Chapter 7 petition with the United States Bankruptcy Court, District of Nevada. In addition to the petition, you must file a schedule of your assets, income, financial affairs, liabilities, expenditures, current leases, executory contracts, and most recent tax return. You may also have to file a certificate of credit counseling as well as a debt repayment plan you created during the counseling.
- Once the petition is filed, the bankruptcy clerk notifies your creditors. The court imposes an “automatic stay” on collection agencies from pursuing you (in most cases).
- Twenty-one to 40 days after you file the petition, your court-appointed case trustee will hold a meeting of creditors where you must answer their questions under oath. The bankruptcy judge is not present at this meeting. If the trustee believes you do not qualify for chapter 7 because you are “abusing the system” the trustee will let the court know within 10 days.
- If the case trustee finds you have no non-exempt assets in your estate, it will file a “no asset” report with the court, and your unsecured creditors will receive nothing.
- If you do have exempt assets, the trustee will distribute them to creditors. If there is anything left over, you get the remainder.3
Download bankruptcy forms here.
4. Who is the case trustee?
After you file for chapter 7 bankruptcy in Nevada, the court appoints a trustee to administer the case. The trustee will determine which of your assets are non-exempt from bankruptcy (if any) and then liquidate those non-exempt assets in order to pay your creditors.
Trustees also have “avoiding powers” permitting them to:
- Undo certain property transfers made prior to filing chapter 7;
- Set aside transfers you made to creditors 90 days prior to filing for chapter 7; and
- Pursue fraudulent conveyance claims against you.4
5. Which assets are exempt?
If you file for chapter 7 bankruptcy in Nevada, you should be allowed to keep the following “exempt assets“:
- Up to $605,000 in home equity (“homestead exemption”);
- Up to $15,000 in motor vehicle equity;
- Up to $10,000 of personal property (“wildcard exemption”);
- Art and jewelry valued up to $5,000;
- Appliances, electronics, furniture, clothing, household goods, and home and yard equipment valued at up to $12,000;
- The higher of 75% of your wages or 50 times the federal minimum wage;
- Public employees’ retirement benefits;
- ERISA-qualified pension or stock bonus plan up to $1 million;
- Personal injury awards of up to $16,150.
- Public benefits; and
- Income tax refunds.5
6. How is chapter 7 different from chapter 13?
Chapter 7 bankruptcy involves the liquidation of non-exempt assets to satisfy creditors’ debts. In contrast, chapter 13 bankruptcy centers on creating a repayment plan.
Debtors with steady income may prefer chapter 13 because it allows them to catch up on late mortgage payments, thereby staving off foreclosure as long as you follow the payment plan.
Note that if you file for chapter 7 and believe chapter 13 was a better option, you may be able to change the filing mid-course.6
A Las Vegas bankruptcy attorney can help you determine which route is the best way to go based on your monthly income, disposable income, and obligations such as car loans, etc.
7. Will my credit score go down?
Filing for chapter 7 bankruptcy will hurt your credit score and remain on your credit report for 10 years.7
8. Can casino markers be discharged in bankruptcy?
Not repaying Nevada casino markers is a criminal matter, not just a civil matter. As long as the criminal case is open, casino marker debts are not eligible for a bankruptcy discharge. But after the criminal case ends, it might be possible to discharge any remaining casino marker debt in bankruptcy.8
9. How much does filing for chapter 7 cost?
A chapter 7 bankruptcy filing requires an upfront payment of a:
- $245 case filing fee;
- $15 trustee surcharge; and
- $75 administrative fee.
But the court can allow you to pay these fees in up to four installments within 120 days of filing the petition. The court can also extend this deadline to 180 days after the filing for good cause shown.
And the court can waive these fees altogether if:
- Your income is less than 1.5 times the poverty level; and
- Even an installment plan will not help you pay the fees.9
10. How long does the process take?
In many cases, Nevada chapter 7 bankruptcy proceedings conclude within six months of filing.10
Considering filing bankruptcy? For legal advice from a Nevada bankruptcy attorney, contact our Las Vegas office today. Our law firm practices throughout the state including Henderson, Mesquite, Laughlin, and Reno as well as Las Vegas, NV. And our chapter 7 bankruptcy attorneys know how to maximize filers’ Nevada bankruptcy exemptions.
- 11 U.S.C. § 727(a)(1) (Bankruptcy Code). See, for example, Hillsman v. Escoto (In re Escoto), (Bankr. D. Nev. 2014) 544 B.R. 212; In re Shults, (B.A.P. 9th Cir. Nev. 1983) 28 B.R. 395, 10 Bankr. Ct. Dec. (LRP) 405.
- 11 U.S.C. §§ 109(g), 362(d) and (e). 11 U.S.C. §§ 101(41), 109(b). 11 U.S.C. §§ 109, 111. 11 U.S.C. § 727. Fed. R. Bankr. P. 4005. 11 U.S.C. § 523(a).
- Fed. R. Bankr. P. 1007(b). 11 U.S.C. § 521. 11 U.S.C. § 362. 11 U.S.C. § 362(b), Fed. R. Bankr. P. 3002(c).. 11 U.S.C. § 502(b)(9). 11 U.S.C. § 341(c). Fed. R. Bankr. P. 2003(a). 11 U.S.C. § 343.11 U.S.C. § 704(b) (“means test” that takes into account your median income).
- 11 U.S.C. § 721. 11 U.S.C. §§ 701, 704.
- NRS 21.091. NRS chapters 115 and 286. 11 U.S.C. § 522(b).
- 11 U.S.C. § 706(a).
- Marcie Geffner, How Long Does Bankruptcy Stay On Your Credit Report? Credit Karma (November 6, 2020).
- Vernon Nelson, “Casino debtors will not find a haven from Nevada’s bad check statute in bankruptcy,” Nevada Gaming Lawyer (September 2013)
- 28 U.S.C. § 1930(a). Fed. R. Bankr. P. 1006(b). Fed. R. Bankr. P. 1006. 11 U.S.C. § 707(a). 28 U.S.C. § 1930(f).
- See Fed. R. Bankr. P. 4004(c).