One of the most common concerns debtors have about filing for bankruptcy is whether they can protect their assets from liquidation from the bankruptcy court. In many cases, the answer is yes! Both state and federal law provide exemptions that protect assets during the bankruptcy process. An experienced bankruptcy attorney can tailor the many different exemptions for use in different ways to protect your assets and meet your specific needs—so consult with a Las Vegas bankruptcy attorney regarding the benefits and other implications of a possible bankruptcy.
The Bankruptcy Process
A Chapter 7 bankruptcy begins by filing a petition with a federal bankruptcy court, supplemented with documentation about the debtor’s financial assets and liabilities. Once you file the petition, a trustee of the bankruptcy court will schedule a Meeting of Creditors. At this meeting, creditors will have the opportunity to present valid objections to the discharge of their debts. The trustee will also ask the debtor questions about the information contained in the bankruptcy petition. After this meeting, the trustee determines:
If the trustee determines that all assets are exempt and the debtor meets the means test and all other eligibility requirements, the trustee will recommend that the bankruptcy court order a discharge of the eligible debt. Debtors that disagree with the recommendations of the trustee or findings of the court have the opportunity to schedule a hearing and explain their positions to the bankruptcy judge. The court then determines the matter. Disagreements can take place due to:
- The value of a debtor’s asset
- Whether a particular exemption applies to that asset
- Whether a creditor has a valid objection to the discharge of its debt
Whether a debtor meets the means test for a Chapter 7 bankruptcy
A Chapter 13 bankruptcy also begins by filing a petition supplemented by documentation of assets and liabilities. A Chapter 13 petition also contains a proposed repayment plan that provides for partial payment to eligible creditors during three to five years. If the trustee approves the payment plan and the court accepts it, the debtor will make regular payments to the trustee for the duration of the repayment period. The trustee then distributes the funds to creditors in the amounts established by the repayment plan. At the end of the repayment period, a debtor who has stayed current on payments to the trustee and met all other eligibility requirements can have the bankruptcy court legally discharge the remainder of the debt identified in the Chapter 13 petition.
How Bankruptcy Exemptions Work
A debtor has a legal obligation to truthfully disclose all assets and their fair market values in the bankruptcy petition, because the bankruptcy court has the authority to liquidate assets to pay creditors. Luckily, a debtor can prevent this from happening by identifying an applicable bankruptcy exemption for each asset, which protects that asset from liquidation. Common exemptions include:
The Homestead Exemption, which protects a home or land from a forced sale by any court, provided the owner’s equity in the property does not exceed set amounts. Chapter 115 of the Nevada Revised Statutes currently protects as much as $550,000 in equity in real property. The statute also provides exceptions to, and requirements for, the Homestead Exemption, including for recording the exemption and providing notice to creditors.
The Motor Vehicle Exemption (Nevada Revised Statutes § 21.090(1)(f)) protects up to $15,000 of equity in a single vehicle. If the vehicle was equipped or modified to provide mobility to a disabled debtor, or a disabled dependent, 100 percent of the vehicle equity may receive an exemption. (Nevada Revised Statutes § 21.090(1)(p).)
A debtor may exempt as much as 75 percent of disposable earnings, or fifty times the federal minimum wage. (Nevada Revised Statutes § 21.090(1)(g)) Disposable earnings are defined as gross earnings less any deductions required by law (such as taxes).
The Necessary Household Goods Exemption provides protection for as much as $12,000 in the value of furnishings, electronics, apparel, personal effects, and yard equipment. (Nevada Revised Statutes § 21.090(1)(b))
Individual retirement arrangements and employee pension plans provide protection for as much as $500,000 in present value. (Nevada Revised Statutes § 21.090(1)(r))
The court may exempt the full amount of money paid for child support or alimony if you made it pursuant to a court order. Arrearages are not eligible for exemption—only the amount of payments that you actually made. (Nevada Revised Statutes § 21.090(1)(s) and (t))
Nevada law also provides a “catchall” exemption, which can protect as much as $1,000 of value in property that is not subject to other exemptions. (Nevada Revised Statutes § 21.090(1)(z).)
Because existing laws establish these exemptions, debtors can plan for the protection of their assets before ever filing bankruptcy petitions. By working with an experienced bankruptcy attorney, the debtor can apply a valid bankruptcy exemption for every asset—and file a bankruptcy petition with a comprehensive strategy for the protection of all assets.
Experienced Legal Advice Through Every Step of the Nevada Bankruptcy Process
The bankruptcy process can overwhelm applicants. With the advice of an experienced Las Vegas bankruptcy attorney, however, you can prepare for every step in the process, and ultimately find relief from burdensome debts. Contact the Bankruptcy Law Firm today to explore your options for debt relief. You can schedule an appointment on our website, or call (702) 997-4149. You can also email our office at LawOffice@bankruptcy.com. Don’t struggle to stay ahead of insurmountable debt. Take the first step toward a fresh financial start by calling the Bankruptcy Law Firm.