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Posted by: National Bankruptcy Forum
Last updated Nov. 7, 2017.
If you thought all there was to Nevada was Las Vegas, think again. While many people associate the state with long weekend getaways having fun at casinos and shows, did you know that Nevada is the largest gold-producing state in the U.S.? It also has more mountain ranges than any other state in the country, and about 85% of the land in Nevada is owned by the federal government. Home to Area 51 and the Hoover Dam, Nevada has a lot more going for it than Sin City, though the latter is why the state has more hotel rooms than any city on Earth. Seriously.
But what if you’re a resident of Nevada and not just one of its 43 million annual visitors to the southern part of the state alone, contributing $35.5 billion each year to the local economy? It could be likely that you have a job in the leisure and hospitality industry here, which employs nearly 300,000 people statewide. You’re paid less than the average worker in the U.S., about $909 per week versus $1,067. And maybe you’ve hit hard times.
Many consumers who find themselves in debt and considering bankruptcy are surprised to learn that the bankruptcy laws vary considerably by state. There is a common misconception that all bankruptcy cases are the same and involve nothing more than “filling out some forms.”
Nothing could be further from the truth.
This post will review your options if you are looking to file Chapter 7 bankruptcy in Nevada, what property you can keep, how much bankruptcy might cost you, and where the bankruptcy courts are located, though your best bet will be to do your research here, then contact an experienced Nevada bankruptcy attorney for next steps.
- Will I qualify for Chapter 7 bankruptcy in Nevada?
- Will I lose all my property if I file Chapter 7?
- Nevada Bankruptcy Exemptions
- How much will bankruptcy cost in Nevada?
- Nevada Bankruptcy Court Locations
Will I qualify for Chapter 7 bankruptcy in Nevada?
They can hardly be called “new” any longer, however, changes to the bankruptcy laws passed in 2005 made it more difficult to file for Chapter 7. If based on a household of similar size, you earn more than the average Nevada family, you will need to pass the means test before you can qualify for Chapter 7 bankruptcy.
In theory, the means test was put in place to prevent those who could afford to pay something back to creditors from getting immediate relief through a Chapter 7. In practice, it represents just another government formula that seems totally divorced from logic. Suffice to say that bankruptcy lawyers are not big fans of the means test.
If you qualify for Chapter 7, however, you’ll “liquidate” your assets to pay off your debt. If you don’t qualify, you can file for bankruptcy under Chapter 13, the “reorganization” bankruptcy that puts you on a 3- to 5-year plan to pay back creditors. For many people, Chapter 7 is the more attractive option, which we’ll get into next.
Will I lose all my property if I file Chapter 7?
Likely, no, thanks to asset protection laws known as exemptions. Both inside and outside of bankruptcy, exemptions prevent creditors from taking every last dime you own. As a matter of public policy, these laws designate certain property as “untouchable,” meaning neither the bankruptcy trustee nor the credit card company can take it from you regardless of how much you owe.
Exemption laws have been passed in every state, as well as by the federal government, and are the reason that the myth about losing everything in bankruptcy remains just that, a myth.
As I’ve mentioned above, you’ll be able to use the Nevada exemption laws to protect at least some of your property. Many states allow bankruptcy filers to choose between state and federal exemptions, but Nevada is not one of those states. If you file a case in Nevada, you will have to use the state’s exemptions — the only exception being if you’ve only recently moved to the state.
What exactly will Nevada law allow you to protect through bankruptcy? Luckily, the exemptions here are fairly generous. The following are some of the most common.
Nevada Bankruptcy ExemptionsThe top 5 exemptions under Nevada state law.
|Type of exemption||Nevada law|
|Homestead||$550,000, but cannot be doubled|
|Personal property||$12,000 in household goods and furniture, $5,000 in jewelry and books, $1,000 wildcard|
|Vehicle||$15,000; unlimited if disabled|
|Wages||75% or 50 times the federal minimum wage, whichever is greater|
|Pension/retirement||Protected by federal law, up to $1,171,150 in IRAs and Roth IRAs|
Nevada Homestead Exemption
Under Nevada Revised Statutes 115.010 & 115.020, up to $550,000 in equity of a house, condo, mobile home, or any other place you live can be shielded from the trustee and kept through the bankruptcy process in Nevada. This is one of the best homestead exemptions in the entire country.
Married couples, however, may not double this exemption. A homestead declaration also must be recorded before filing for bankruptcy.
Example: If you own a home worth $750,000 in Nevada but still owe $500,000 on the mortgage, your equity in your home is $250,000. Because this is less than or equal to the amount of the homestead exemption, you can protect your home under Chapter 7 bankruptcy.
Nevada Vehicle Exemption
Debtors can protect up to $15,000 of equity in a car. The exemption becomes unlimited if the car is equipped for the disabled.
Other Personal Property Exemptions
In addition to their homes and cars, debtors can protect other personal property, too. For example, household goods, furniture, appliances, and home and yard equipment up to $12,000 in total are exempt; books, jewelry, musical instruments, and works of art up to $5,000 in value are exempt; and pictures and keepsakes, health aids, one gun, and personal injury compensation up to $16,150 is exempt. Legal claims are considered assets and must be listed in your bankruptcy schedules; failure to list can cause the asset to be forfeited to the trustee.
Nevada law also allows a wildcard exemption of $1,000 that can be applied to miscellaneous personal property.
Wages and Tools of the Trade
A debtor can exempt 75% of wages or 50 times the federal minimum wage, whichever is more, under Nevada law. If you have tools of the trade, you also can exempt them: $4,500 in farm equipment, $4,500 in mining equipment, $10,000 in library equipment, and any uniforms and arms that you are required to keep.
Retirement Accounts in Nevada
Retirement accounts, such as a 401(k), are generally exempt in bankruptcy. Federal laws known as the federal “non-bankruptcy exemptions” protect ERISA-qualified and tax-exempt retirement accounts from creditors; these laws apply in Nevada bankruptcy cases. Furthermore, IRAs and Roth IRAs are also protected by the federal non-bankruptcy exemptions up to the amount of $1,171,150.
How much will bankruptcy cost in Nevada?
Just as bankruptcy laws vary by region, so, too, does cost. In connection with this piece, I tried calling several firms in the Las Vegas area, none of whom were willing to “quote” a fee. This is a common defense mechanism that consumer firms, who are used to being called by fee-shopping clients, engage in. They are hesitant to discuss fees for fear that they will be too high or too low. No matter — I’ve filed numerous bankruptcy cases myself and have many friends around the country who are consumer lawyers, so I have a good idea what the range is, both in and around Las Vegas, as well as in more rural parts of Nevada.
There are always outliers — firms willing to do cases for next to nothing — but as a general rule, a Chapter 7 case in a city like Las Vegas will cost somewhere between $1,000 to $1,500 for attorney’s fees, plus the court filing fee of $335. In more rural parts of the state, the attorney’s fees will be lower. Also, keep in mind, most firms offer installment plans.
These numbers, like the actual amounts for bankruptcy exemptions, may fluctuate from time to time, so it’s best to consult with a bankruptcy attorney as you are preparing to file to get the most up-to-date information.
Nevada Bankruptcy Court Locations
Nevada has two United States Bankruptcy Court locations: Las Vegas and Reno. While it’s rare you would have to travel to court, I’ve included the address and contact information for each below.
Las Vegas: Foley Federal Building and U.S. Courthouse, 300 S. Las Vegas Blvd., Las Vegas, NV 89101, Phone: (702) 527-7000
Reno: C. Clifton Young Federal Building and U.S. Courthouse, 300 Booth St., Reno, NV 89509, Phone: (775) 326-2100