Nevada; some call it the mecca for fun, other identify it as the state where sin city is located. For residents, Nevada, with its vast arid land and snow-capped mountain ranges, its home. And when you are home one of your main priorities is to feel safe, secure, and well, relatively happy. If you have medical debts, credit card bills, or other debt piling up around you, you may not feel safe or happy. Whether you have lost your job, suffered a medical injury or illness, or just can’t keep up with your current debts, a Chapter 7 bankruptcy may give you the life line you need to turn your life around.
Chapter 7 Bankruptcy Basics
Bankruptcy is divided into different types called Chapters. Each Chapter helps a specific set of people or companies, provided that they meet the qualifications. Before 2005 nearly anyone could file for bankruptcy. After President Bush passed the Bankruptcy Reform and Consumer Protection Act in October, 2005, the methods and the requirements changed, making it more difficult for debtors to file.
What Are the Requirements?
For the bankruptcy court to consider your case, you must fall at or below the median income level for the state you reside in. Each state has a different average. For Nevada the median income level* by family is:
- 1 person – Income level must fall at or below $43,041
- 2 people – $57,541
- 3 people – $60,783
- 4 people – $70,509
- More than four family members: Debtors must add $7,500 per person
*These income levels may change from annually.
If you exceed the average income level for Nevada, you still may be able to qualify. The means test, a mathematical method for determining a debtor’s debt to asset ratio, allows the court and the debtor to see if a Chapter 7 is the right option. Your bankruptcy attorney may ask you for additional financial information if you must pass the means test to qualify for bankruptcy, Chapter 7.
What Else Do You Need?
It’s understandable that you are worried and concerned about filing Chapter 7. Before you meet with your attorney, plan to bring the following documents. He can give you a better idea of how a Chapter 7 will affect you.
- Last six months of pay stubs
- A complete list of all current creditors (even ones you have not paid on)
- Last year’s filed tax return
Once your attorney examines these documents and you decide that a Chapter 7 is right for you, keep a few things in mind.
- A Chapter 7 will wipe away nearly all unsecured (credit cards) and some secured (house or vehicle) debt.
- Chapter 7 is a short process, lasting approximately six months.
- You will be required to take two short courses on debt education, before and after you file. They last about an hour and a half and can be done on the Internet.
- You must attend a short hearing, called a “341 Meeting.” The hearing only lasts a few minutes where a representative of your creditors will ask a couple of short “yes or no” questions.
- A bankruptcy can stay on your credit report for 10 years. It will initially lower your score between 50-75 points, but as long as you pay your remaining bills regularly, your credit will immediately begin to rebuild.
Can You Keep Anything?
Of course! The Consumer Protection Act was put specifically in place to help debtors keep some property and assets left out or exempt from bankruptcy. While some states allow debtors to use either state exemptions or federal exemptions, for those living in Nevada only the state exemption are available for those filing for bankruptcy. You should double check with your attorney about which exemption laws can be doubled if filing jointly. Some exemption laws for Nevada include:
- A home exemption: Your primary residence or mobile home along with the land it stands on is exempt up to $550,000.
- 100% of government property is exempt, including jails, public buildings and courthouses.
- 100% of rental deposits
- 100% of property held by the public housing authority
- Personal property: Up to $1,000 in personal property is exempt from Chapter 7 bankruptcy. Also a group limit of $12,000 of the following items are also exempt:
- 1 television
- Private library – Up to $5,000
- 100% of uniforms and 1 firearm
- Business or farm equipment:
- $10,000 of office equipment and supplies is exempt
- $4,500 worth of farming equipment tools, and 1 truck
- $4,500 worth of mining equipment, 1 cabin or other similar dwelling
- 100% of a fire company engines, hooks, hoses and other tools
- Retirement and benefits:
- 100% of public employees’ retirement
- 100% of federal civil service retirement
- Some retirement accounts as defined by the IRS
- 100%Social Security benefits
- 100% Unemployment compensation
- 100% Fraternal Benefit Society benefits
- 100% FEMA benefits
- 100% Federal civil service disability and death benefits
- ERISA benefits
- Up to $500,000 in monies held in an IRA or simplified employee pension plan
- 100% pension interests or profit sharing plans for Foreign Service employees
- Medal of Honor pensions for Army, Navy, Air Force, Coast Guard personal
- Veterans Administration benefits and pensions
- Vehicle: Up to $15,000 for one automobile or 100% if used for disabled persons
- Other compensation or insurance proceeds:
- 100% Group life insurance benefits and proceeds
- 100% earned income tax credit
- 100% public assistance payments
- 100% Vocational rehabilitation handicap grants
- 100% industrial insurance compensation
There are a number of other exemptions that may apply to your specific financial situation. You should note that exemption amounts do change. It is important to check with your attorney prior to filing to see what you will qualify for.
It’s not too late to get your life back on track. Call a Nevada bankruptcy attorney today to stop the worry and stress. A Chapter 7 bankruptcy may help you find the happiness again in your life.
Nevada Bankruptcy Courts
Foley Federal Building
300 Las Vegas, Nevada 89101-5833
Phone: (702) 388-6505
C. Clifton Young Federal Building and
United States Courthouse
300 Booth Street, 1st Floor
Reno, Nevada 89509-1317