What is Bankruptcy?

Bankruptcy is a process provided for by federal law which enables an individual, a married couple, or a business to discharge their debts and get a fresh financial start.  Filing bankruptcy immediately stops all of your creditors from continuing any attempts to collect the debt from you while your case makes its way through the bankruptcy court system, with some exceptions.  The residency requirements for Nevada bankruptcy are that you must have resided in Nevada for 91 days during the past 180 days.  Your homestead exemptions may be different than Nevada though, if you have not owned your home for more than 1,215 days prior to filing bankruptcy.  Contact the Bankruptcy Defender with any questions regarding these exemptions.

Regardless of why you are unable to pay your debt, bankruptcy can eliminate your debts giving you the breathing room to continue with your life without the constant worry of past-due bills.

Should I File Chapter 7 or Chapter 13 Bankruptcy?

Chapter 7 bankruptcy is generally the best choice if you make below the median income in your state – it discharges most or all of your debts and does not require you to pay any existing balance on those debts it discharges.

Chapter 13 bankruptcy is generally the best choice if you have a higher than median income and can afford to pay a portion of your debts over a 3-5 year period.  This is especially important if you want to save your house from foreclosure – the amount you owe your bank for past due payments can be ‘rolled’ into your payment plan.  Even if you are just making your usual monthly payment and only catching up a small portion of the back payments per month, the bank cannot foreclose on you.  Another benefit to Chapter 13 is that if you owe more than your car or truck is worth, and you bought the vehicle more than 910 days ago, you can force the bank to accept payments totaling ONLY what the vehicle is worth.  Additionally, if you owe the IRS a large amount of back taxes that have become due less than 3 years ago, or you have certain problems that a Chapter 7 does not solve, you can often solve them with a Chapter 13 bankruptcy.

Overview of Chapter 7

Chapter 7 bankruptcy specifically is known as “straight” bankruptcy or “liquidation.”  Nevada law provides ample exemptions to protect the majority of the assets of most people who file bankruptcy, but does not protect substantial assets from being sold and used to pay creditors.  In most cases, you will keep all of your belongings and property, but if you have a lot of cash-on-hand, motorcycles, boats, or other non‑exempt assets, you might end up turning them over to the bankruptcy court to sell to pay your creditors.  A list of current Nevada exemptions are available on this site.

If you are unsure as to whether all of your assets will be exempt in bankruptcy, please call the Bankruptcy Defender.  We may be able to take certain limited steps to protect some non‑exempt assets and convert them to exempt assets, but you must do this before you file bankruptcy.

Do I Qualify for Chapter 7 Bankruptcy?

You can qualify for Chapter 7 bankruptcy if :

• You have not filed and completed a Chapter 7 bankruptcy in the past 8 years;
• Most of your debts are for consumer debts such as credit cards, payday loans, medical bills, repossessions, broken apartment/home leases, court judgments from lawsuits; and
• You pass the ‘means test’, meaning your total household income is less than the average income of families in the State of Nevada.  As of November 2009, the average is $46,316.00/yr ($3859.66/month) for a single person living alone, $67,052/yr for a household of 3 (married w/one child or single w/two children), or even $78,004/yr for a household of five (married w/3 children or single w/4 children.)
  • If you make more than this, but based on your actual ‘reasonable and usual’ living expenses,  and certain IRS allowable maximum deductible expenses, you end up with less than a certain amount (less than $109.59 or up to $182.50 in some cases as of January 2010), then you might have to file a Chapter 13 case and pay some of your debts during a 3-5 year repayment plan before you can receive a similar discharge as you would normally receive in Chapter 7.

Overview of Chapter 13 Bankruptcy

Chapter 13 bankruptcy, is often called the ‘wage earner’ bankruptcy.  If you have valuable assets, such as a home or multiple vehicles, that might not be exempted in a Chapter 7 bankruptcy, you may prefer a Chapter 13 bankruptcy.  During Chapter 13, your bankruptcy attorney prepares an detailed ‘plan’ to propose for approval by the Bankruptcy court.  The ‘plan’ will require payment for any past due balances on secured property that you want to keep, such as missed mortgage or missed vehicle loan payments.  The ‘plan’ must also include paying the equivalent value of non-exempt assets.  The ‘plan’ may also include the remaining balance owed to your bankruptcy attorney for legal fees.  The Bankruptcy Defender charges the same up-front cost for a Chapter 13 case as a Chapter 7 case, but because of the additional time needed to create the ‘plan’ and the requirements to monitor the case throughout the 3-5 years, there are additional legal fees, and these fees are included in the ‘plan’.  If the bankruptcy court approves and confirms the plan, you would pay a fixed payment either every two weeks or once a month to the Bankruptcy Court ‘into the plan’.

The Trustee assigned to your case by the Bankruptcy Court will take these payments and pay a pro‑rata amount to each of your creditors during the 3-5 year plan.  After those 3-5 years are finished, and presuming you made all the payments as called for by the plan, you would receive a discharge of any remaining balances owed to the creditors.  If, for example, your ‘plan’ called for paying the unsecured creditors only 20% of the amount you owe them, then after the 3-5 year plan is completed, you would be discharged permanently from ever having to pay the remaining 80% owed to those credit card companies.

If you have questions regarding whether you should file Chapter 7 or Chapter 13, please call the Bankruptcy Defender.  We will be happy to discuss your options with you.  We offer a free 30-minute initial consultation for individuals interested in filing bankruptcy.

Is the Bankruptcy Defender the right attorney for my Bankruptcy?

The Bankruptcy Defender provides confidential and compassionate bankruptcy services.  We pride ourselves in our personal service and provide that ‘personal touch’ you just do not get with high-volume TV advertising bankruptcy attorneys.  When you hire the Bankruptcy Defender for your bankruptcy, you meet directly with the Bankruptcy Defender himself, not a legal assistant or a paralegal.  If you have a question, you can speak directly with me by just calling and asking for me.

After your bankruptcy is completed and you have received your discharge, we can work with you on ways to improve your credit score.  You would be surprised at how quickly your credit can recover and how, in only a few years, you can qualify for a home loan or a NEW car loan, not a used car from a ‘buy here, pay here’ car lot.

The Bankruptcy Defender helps individuals file for bankruptcy in Southern Nevada, including Las Vegas, North Las Vegas, Henderson, and Boulder City.