Generally, you will NOT lose all of your property when you file Chapter 7 bankruptcy. When a person files bankruptcy he or she is entitled to keep certain property, or otherwise known as exempt property.
In Nevada, there are over 33 types of exempt property available. If the value of your equity in the property is below the exemption amount, then you will be entitled to keep the property.
It is important to remember that the bankruptcy court values only the equity in an item to determine if it falls within the exemption allowed . For example, a car worth $10,000 wholesale with a loan against it in the amount of $9,000 has only $1,000 of equity. Because of that, you may be able to keep your property even if you file.
Nevada is known as a very Debtor friendly exemption state and in almost every Chapter 7 bankruptcy case the Debtor retains ALL of his or her property. Some of the common Nevada exemptions are:
- Homestead – $550,000
- Vehicle – $15,000
- Home Furnishings – $12,000
- Clothing/Jewelry – $12,000
- Miscellaneous (usually used for cash and bank accounts) – $1000
- Retirement Accounts – 100% up to $500,000
- Net unpaid wages owing at time of filing – 75%
- Tools used in current employment – $12,000 per debtor
How to Prepare for a Bankruptcy Filing
It is important to understand property valuation before filing for bankruptcy. It is also possible, within certain limits, to do some planning to convert what may be a non-exempt asset to an exempt asset and, thus, not lose it to the court in the event of a bankruptcy filing.
The most common property people lose is income tax refunds and checking account funds. Although each case is different and each trustee has his or her own limitations, if the combination of cash, bank accounts, stock and tax refunds exceeds $1,000 – $1,500, a bankruptcy filing could put you in jeopardy of losing it to the Trustee. Therefore, spend it before you file for bankruptcy, or you could lose it to the court.
Whatever you do, do not use the money to pay a loan owed to a relative. However, you should consult with an experienced Las Vegas bankruptcy attorney prior to spending the money or trying to convert a non-exempt asset to an exempt asset. You need to be prepared before filing bankruptcy or you could lose your property.
For more information about what possessions are exempt from bankruptcy, contact an experienced Las Vegas Bankruptcy Attorney.
