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6151 Lakeside Dr.,  Suite 2100
Reno, NV  89511

Reno Bankruptcy Attorney

Stephen R. Harris, Esq.

“Providing Financial Protection for 46 Years”


Bankruptcy Laws Specific to Nevada

Bankruptcy Laws Specific to Nevada

Bankruptcy Laws Specific to Nevada

Nevada State Flag

The Nevada State Flag

“If you are concerned about losing a lot of your personal property or real property assets because you are contemplating filing for Bankruptcy; in Nevada you may be able to rest a little easier. Nevada is known as a debtor-friendly state that protects many forms of personal property. Nevada has state exemption laws that protect certain amounts, and types of personal property and real property assets from creditors.”

Nevada State Exemptions 

When you file for Chapter 7 bankruptcy, Nevada bankruptcy law allows you to exempt certain personal property and real assets from being sold by the bankruptcy trustee to pay off your debts. This means that you can keep a certain amount of real property, such as your home, personal property, tools of your trade, including a certain amount of money. This allows people to truly achieve a fresh start after filing a chapter 7 bankruptcy, by helping to ensure that they can still maintain a decent standard of living

Nevada’s bankruptcy exemptions also play a role in Chapter 13 bankruptcy. You keep all of your property, but you’ll pay the value of nonexempt property in a Chapter 13 repayment planIf you choose to, or are required to file a chapter 13 bankruptcy, the exemptions help determine how much you will have to repay creditors through your repayment plan.

Exemptions are the laws that determine what assets and  personal property you can keep after filing bankruptcy in Nevada. Each state has its own specific exemption laws which dictate what type of personal property and real assets you can keep. The amount of protection, and the details vary from state to state.Specifically, Nevada has chosen to not use the federal bankruptcy exemptions. This means that if you file for Chapter 7 bankruptcy in Nevada you must use the Nevada state exemptions for your bankruptcy case.

hat happens to nonexempt property in a Chapter 13 bankruptcyThe trustee won’t sell your nonexempt property. Instead, you’ll pay an amount equal to the value of the nonexempt property to your unsecured creditors (creditors whose debt isn’t guaranteed by collateral). For instance, suppose that you aren’t able to exempt a boat worth $15,000 or a timeshare valued at $7,500. You’ll need to pay your unsecured creditors at least $22,500 over the course of your three- to five-year plan.


Nevada Residency Requirements

Nevada is known as a transient state. There’s a lot of people coming and going from in and out of state. I often meet with people that are new to the area, and they’re looking to file for bankruptcy. The rthe first question is how long do you have to live in Nevada before you can file for bankruptcy here.

The bankruptcy rule is that the court has jurisdiction over you as long as you have lived in Nevada over 90 days of the last 180 days. The actual rule states that the greater part of the last 180 days you have to have made Nevada your residence. If you’ve been here for three months continuously, you can file for bankruptcy here in the State of Nevada.

If you have been a Nevada resident for at least 730 days (2 Years) before filing a bankruptcy petition then the Nevada bankruptcy exemptions will apply. If however you were moving around frequently, say due to work and weren’t living in any one particular state during the two years before filing for bankruptcy. You would use the exemptions of the state you lived in for most of the 180 days before the two-year period immediately before your filing. You can check this link to learn more about filing for bankruptcy after moving to a new state.

Nevada Automatic Stays

When an individual files for bankruptcy – whether Chapter 7 or Chapter 13 – an automatic stay goes into effect. The automatic stay places a temporary hold on many actions by creditors, including bill collection and foreclosure proceedings. The automatic stay will therefore put a temporary hold on any foreclosure proceedings already in progress while the bankruptcy case is pending.

Additionally, if a foreclosure proceeding has not yet begun, no proceeding will be initiated while the automatic stay is in effect. Though the automatic stay during bankruptcy is not a permanent solution for homeowners, the automatic stay can give the homeowner a temporary reprieve from creditor harassment and give the homeowner time to make more permanent arrangements or repayment plans.

Nevada Non-Exempt Property

Nonexempt or non-dischargeable property is property that you own that isn’t protected in bankruptcy. However remember that the purpose of a Bankruptcy is to provide you with a fresh start, not to make your life more difficult. You will be able to exempt  property listed in your states exemption statutes. You will  likely be able to keep things that  you’ll need to maintain a job and  a home.

Nonexempt property won’t appear in the Nevada state exemptiona list. What will happen to your nonexempt property will depend on the type of bankruptcy that you file, most commonly either chapter 7 or 13. Usually chapter 7 if you can qualify.

Your nonexempt property in a Chapter 7 bankruptcy will be sold by the bankruptcy trustee – a court appointed  official responsible for managing your case—will sell your nonexempt property for the benefit of your creditors. The trustee will use the sales proceeds to pay your bills in the order required by bankruptcy law. Priority debt, such as domestic support obligations (child or spousal support) or tax debt, will get paid first. If you don’t have priority debt, or if funds remain after paying it in full, the trustee will pay your nonpriority unsecured debts, such as credit card balances, personal loans, and utility bills.

A chapter 13 filing property will prevent the trustee from selling your nonexempt property. Instead, you’ll pay an amount equal to the value of the nonexempt property to your unsecured creditors; those creditors whose debt isn’t guaranteed by collateral. For instance, suppose that you aren’t able to exempt a boat worth $26,000 or a timeshare valued at $9,500. You will need to pay your unsecured creditors at least $35,500 over the course of your three- to five-year plan.

Please see this link for a more details within the Nevada Revised Statutes:  statute 11 523(a)

Nevada Non-Exempt Property . . . Continued

The following debts cannot be discharged in either Chapter 7 or Chapter 13 Nevada bankruptcies:

  1. Back child support, alimony obligations and other debts dedicated to family support.
  2. Debts for personal injury or death caused by driving while intoxicated.
  3. Student loans, unless it would be an undue hardship for you to repay.
  4. Fines and penalties for violating the law, including traffic tickets and criminal restitution.
  5. Recent income tax debts (within 3 years) and all other tax debts.
  6. Debts you forget to list in your bankruptcy papers, unless the creditor learns of your bankruptcy case.

The following debts may be declared non-dischargeable by a bankruptcy judge in Chapter 7 if the creditor challenges your request to discharge them.

  1. Debts you incurred on the basis of fraud.
  2. Credit purchases of $1,150 or more for luxury goods or services made within 60 days of filing.
  3. Loans or cash advances of $1,150 or more taken within 60 days of filing.
  4. Debts from willful or malicious injury to another person or another person’s property.
  5. Debts from embezzlement, larceny or breach of trust.
  6. Debts you owe under a divorce decree or settlement unless after bankruptcy you would still not be able to afford to pay them or the benefit you’d receive by the discharge outweighs any detriment to your ex-spouse (who would have to pay them if you discharge them in bankruptcy).

Federal Non-Bankruptcy Exemptions

To confuse things a little more, federal law also has bankruptcy exemption laws in place. Since as I explained previously, Nevada has chosen through the state legislation to not use these federal mandates. Nevada therefore requires people filing for bankruptcy to use these state exemptions instead.

Although you may not use the federal exemptions in Nevada, you are entitled to federal non-bankruptcy exemptions. These federal non-bankruptcy exemptions protect federal programs like veteran’s benefits and federal retirement accounts.


Married Filing for Joint Bankruptcy

Keep in mind, if you are a married couple filing for joint bankruptcy, you and your spouse may double the state’s exemptions.  Each of you would be allowed to claim the entire exemption amount allowed by Nevada state law for personal and real property that belongs to both of you.

This applies to any Nevada state exemption unless it is specifically noted that you can’t do so, such as with the homestead exemption. Nevada is one of the few states where the homestead exemption is an exception to the rule and married couples cannot double the amount of the state exemption.


Specific State Exemptions in Nevada

Below is a  list that includes some of the more commonly used Nevada bankruptcy exemptions, but there are numerous other exemptions available to protect specific property. Nevada updates its exemption figures periodically. You can verify the current exemption by reviewing the complete text of the specific statute within the Nevada Revised Statutes or by consulting with an experienced local bankruptcy attorney. 

Please call our office at (775) 786-7600 or (775) 690-9120 and set up an appointment for a free and confidential consultation with me to discuss your financial situation. We will investigate all of your options and alternatives, even those that don’t require you to file bankruptcy at all. Feel free to visit our website at www.harrislawreno.com to learn more about our bankruptcy practice here in Reno.

1.   Your Homestead/Primary Residence or Mobile Home

The exemption for your homestead/primary residence or mobile home is up to a valaue equal to a maximum of $605,000 in equity. In order to qualify for this Nevada bankruptcy exemption, you must file a homestead declaration with the county recorder’s office prior to filing for bankruptcy. The home must also be your primary residence and you are current on your mortgage payments. You may then continue to keep making those payments during your bankruptcy proceedings.

To figure the equity or real value you have in your home simply the amount of your mortgage(s) minus what you still owe to the mortgage lender. If your home is worth $385,000 and you owe $125,000 your equity is $260,000 and you would qualify for that exemption since it is less than the $605,000 limit.

The Nevada definition of a homestead accounts for multiple types of homes, including condominiums, manufactured housing, or mobile homes. This would include real property which commonly consists of a parcel of land with a particular type of home on it.

See this link for the actual law within the Nevada Revised Statutes; Nev. Rev. Stat. § § 21.090(1)(l), (m)

2.   Your Personal Property

One of the big fears people have when filing for bankruptcy is that they will lose all of their property in bankruptcy. As we stated above, Nevada is known as a debtor-friendly state that protects many forms of personal property through state mandated exemptions, these include the following:

  • Appliances, household goods, furniture, home and yard equipment to $3000 total.
  • Books to $1500.
  • Burial plot purchase money held in trust.
  • Funeral service contract money held in trust.
  • Health aids.
  • Keepsakes & pictures.
  • Metal-bearing ores, geological specimens, art curiosities or paleontological remains, must be arranged, classified, catalogued & numbered in reference books.
  • Motor vehicle to $1500; no limit if vehicle equipped to provide mobility for disabled person.
  • One gun.

The items listed below are personal property items that are 100% protected through the state bankruptcy exemptions:

  • Health aids (if medically prescribed.)

  • Keepsakes and family photos.

  • Burial plot or funeral service money held in trust. 

  • Escrow and mortgage impound accounts.

  • Collections of metal-bearing ores geological specimens, art curiosities or paleontological remains (these must be arranged, classified, cataloged, and numbered in reference books, Coin collections are not exempt.)

  • Victim crime restitution. 

  • Income tax refunds from state or federal Earned Income Credit.

  • Wrongful death awards to survivors (for the extent needed for support.)

  • Future earnings compensation (for the extent necessary for support.) 

3.   Your Automobile

Many people wonder if they will be able to keep their car in bankruptcy. The Nevada bankruptcy exemption for motor vehicles is up to a maximum of $15,000 of equity. This represents the value of your vehicle after you have paid off the cars loan. There is an unlimited equity in vehicles equipped for a disabled person. 

The Nevada bankruptcy exemption for motor vehicles is up to $15,000 of equity, or For example, someone who owns a vehicle worth $16,000 and owes $10,000 on it will have $6,000 worth of equity in the car. You can find values on websites such as Kelley Blue Book the National Auto Dealers Association. Your bankruptcy trustee will likely favor one of the two websites and expect you to provide a printout from that site as proof of your vehicle’s value.

The trustee might also do one of the following:

  • The trustee will often abandon the car if money wouldn’t be available for creditors after selling it. The trustee must pay off the loan, the amount of your exemption, the costs of sale, and the trustee’s commission. If little or nothing would remain, the trustee will abandon it, and you’ll get to keep it, versus going through the useless  effort of selling it.
  • Redeem the car. Pay the market value of the car to the lender in one lump sum.
  • Reaffirm the car loan. Sign a new loan that will remain in force after the bankruptcy is over and make up the payments in the new agreement. Understand, however, that while you have the right to enter a reaffirmation agreement if you’re current on your payments (and your lender might insist on it), the lender doesn’t have to agree to “modify” the loan in any way.

Many trustees will also allow you to pay for nonexempt vehicle equity. If you wanted to keep your vehicle, it’s likely that you may be able to negotiate a deal with the trustee to pay the amount the creditors would receive minus anticipated sales costs. The trustee might even give you a few months to pay.

So if you’re behind on your car loan before you file for Chapter 7 bankruptcy, and you don’t have the money to redeem it, you’ll be able to keep your car only if your lender is willing to work with you.

4.  Public benefits

  • Aid to disabled, aged, blind and public assistance
  • Industrial insurance (worker’s compensation)
  • Compensation to crime victims
  • Unemployment payments
  • Children’s public assistance
  • Benefits for vocational rehabilitation
  • Social Security Act payment
  • Public employees’ retirement benefits

5.  Tools of Your Trade

  • A maximum of $4,500 of equity in farm tools, trucks, equipment, seed, and stock.
  • A maximum of $4,500 of equity in a prospector or miner’s dwelling, cars, working mining claim, appliances, and tools.
  • A maximum of $10,000 of equity in library tools, equipment, supplies, and inventory.Any uniforms, arms, and accessories that you must keep.

6.  The Nevada Wildcard

There is a “wildcard” exemption of up to $10,000 of any personal property not already covered in the above categories. Available to protect any asset up to $10,000. Some individuals use the exemption to protect boats, RVs, money, or an inheritance. See: NRS 21.090(1)(z)

Although Nevada’s most common bankruptcy exemptions are listed above, several other exemptions exist to protect your property. The state also periodically revises the exemption amounts that is another compelling reason to hire an experienced local bankruptcy attorney. 

Please call our office at (775) 786-7600 or (775) 690-9120 and set up an appointment for a free and confidential consultation with me to discuss your financial situation. We will investigate all of your options and alternatives, even those that don’t require you to file bankruptcy at all. Feel free to visit our website at www.harrislawreno.com to learn more about our bankruptcy practice here in Reno.

6.  Insurance Exemptions

  • Life insurance policy or proceeds.
  •  Life insurance proceeds if you are not insured. 
  • Health insurance proceeds or avails.
  • Group life or health policy or proceeds.

  • Annuity contract proceeds.

  • Fraternal benefit society benefits.

  • Private disability insurance proceeds.

Credit Card Debt Strategies When Filing Bankruptcy

Credit Card Debt Strategies When Filing Bankruptcy

Almost everyone that declares bankruptcy has some credit card debt. Credit card debt may be your primary cause of bankruptcy or a side issue. Regardless, you will be able to discharge all or most of that debt. When you discharge credit card debt it will automatically give you more flexibility to deal with your other debts.

1. Don’t Pay Off Your Credit Card Debt With the Following:

  1. A home equity loan. Credit card lenders may pressure you into taking out a home equity loan, pointing out that the interest rates are much lower and may be tax-deductible. The credit card debt will probably be discharged and your homestead will probably be exempt. When you take out a home equity loan, you are putting your house on the line for credit card debt that will be eliminated in bankruptcy anyway. 
  2. Part of your retirement IRAs or 401(k)s. In almost all cases your retirement plans are protected in bankruptcy. Also, you may be hit with heavy withdrawal tax penalties if you take out the money prematurely.
  3. Debt consolidation loans. In most cases, these types of loans only delay the inevitable. They lengthen the term of the loan to pay off the credit cards, usually with hefty interest rates.

2. Be Careful Not to Inadvertently Commit Fraud

Generally, credit cards are easy to discharge except when creditors allege fraud on your part.  Fraud is when you knowingly or mistakenly make false representations. Do not give any reason for your creditors to believe that you intended to deceive them. The creditor relies on your honest representation, and if because of your actions the creditor suffers damages your case may be dismissed as invalid. There are several actions that may give creditors grounds to charge you with fraud that I will discuss next. Remember this fact, If fraud can be proven to the bankruptcy judge, he may not let you discharge that credit card debt, or your entire filing may be put into jeopardy.

Here is a list of 6 items that have the potential to give credit card companies grounds to challenge your credit card debt discharge:

  1. Be careful about making a lot of charges before declaring bankruptcy. It may appear you had no intent to pay those charges and were aiming to use the bankruptcy process to put one over on the credit card companies. The closer to bankruptcy the charges appear, the more it appears that you had an intent to defraud.
  2. If after talking to your bankruptcy attorney you then begin making unwarranted charges, it may appear that you already decided to initiate bankruptcy.
  3. If your financial condition is particularly poor when you start making credit card charges, it may appear you have no intent to repay them. If you can point out there was a significant reason to believe your financial condition would change, like getting a new higher-paying job, this may not be a concern.
  4. Be careful of charging luxury items and cash advances in close proximity to a bankruptcy filing. Purchases of more than $500 to a single creditor within 90 days of bankruptcy or cash advances of more than $750 within 70 days are automatically presumed fraudulent. So it may be necessary to wait at least 90 days before filing your bankruptcy to avoid this problem.
  5. Avoid creating new credit card balances or transferring old balances to new accounts within 90 days of filing bankruptcy for the same presumed fraud reason as above.
  6. Be careful of what you put on written financial statements. Creditors can use inaccurate information to claim they relied on your statements to lend you money. If they can prove your statements were purposefully incorrect, they may be able to keep you from discharging their obligation.

Other Actions That May Adversely Affect The Discharge of Your Debt

Writing knowingly insufficient funds checks are considered fraud. Postdated checks are similar in that the creditor can claim he knew the check would be no good and for that reason, it should not be discharged. Writing bad checks not only makes it difficult to open new bank accounts, but also can also earn you a trip to jail.

If you have been receiving government benefits fraudulently, bankruptcy will not discharge this obligation. If you’re still receiving those payments, the government agency may attempt to recoup the excess payments by reducing your benefits and future.

Any conduct that is considered willful and malicious will not be dischargeable in Chapter 7 but may be in Chapter 13. Defining what is “willful and/or malicious” is not easy to pin down, but if the creditor is claiming this conduct you can be headed for trouble. You need to see a lawyer immediately, because if you do not address these allegations the person or agency suing you will win automatically and you’re stuck with that decision. There are separate provisions of the bankruptcy law about debts arising from embezzlement and larceny. These debts are also not dischargeable in bankruptcy.

Criminals’ fines also cannot be wiped out in Chapters 7 or 13. Most courts will not allow you to pay these fines in Chapter 13 while other unsecured creditors are left unsatisfied. The problem arises in that if you don’t pay your fines you may be subject to arrest by the court that imposed them. If you can pay the fines before filing, considering doing so.  Talk to your attorney about this sticky situation.

Noncriminal fines and penalties are usually dischargeable in Chapter 13, but not in Chapter 7.

Restitution is where you’re required by court to repay damages you have caused to another person. Restitution is not dischargeable in Chapter 7 or 13. If a victim sues you and obtains a judgment for restitution, you may be able to discharge it in chapter 13 if you did not cause any personal injuries.

Motor vehicle fines can fall into two categories, minor infractions or criminal violations. Minor infractions, such as parking tickets, are not dischargeable in Chapter 7 but are under chapter 13. Criminal violations are not dischargeable under either chapter. Drunk driving and driving under the influence are considered criminal offenses and therefore not dischargeable.

In Conclusion please call our office at (775) 786-7600 or (775) 690-9120 and set up an appointment for a free and confidential consultation with me to discuss your financial situation. We will investigate all of your options and alternatives, even those that don’t require you to file bankruptcy at all. Feel free to visit our website at www.harrislawreno.com to learn more about our bankruptcy practice here in Reno.