Chapter 7 vs. Chapter 13 Bankruptcy in Nevada
Bankruptcy laws are federal laws in nature, but each state has some critical differences in how they administer these laws. Nevada has some different property exemptions in bankruptcy than other states, and this could affect if you should file a Chapter 7 total liquidation bankruptcy or a Chapter 13 installment plan. Before filing, you should research the laws carefully and take into account your personal situation to see which type of bankruptcy is right for you.
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Nevada Homestead Exemption
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Nevada has a generous real property, or homestead exemption. You may keep your home in a bankruptcy if it is valued under $550,000. If you own an expensive home or have a large amount of equity, this makes it much easier to file knowing that you won't lose your home in a Chapter 7 bankruptcy.
Nevada Chapter 13
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A Chapter 13 bankruptcy in Nevada is similar to a Chapter 13 in other states. This is a court supervised plan that allows you to re-pay all of your debts over the course of three to five years. Chapter 13 is a good method to re-structure debt payments and allow you to catch up on some of them. Debts that can not be discharged, such as taxes or child support, can be included in the Chapter 13 repayment plan. This allows you to get them current over time. Home mortgages are the same way, in that you can catch up past due payments over the term of the repayment plan.
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Nevada Chapter 7
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In addition to the generous homestead exemption, Nevada offers other protections for property that you own in the event of bankruptcy. A vehicle valued up to $15,000 is exempt from seizure by the trustee. This compares to the federal bankruptcy exemption for a vehicle of $2,250. Nevada also has a household goods exemption of $12,000, and up to $10,000 in tools of your trade are safe as well. A Chapter 7 bankruptcy is usually preferable to a Chapter 13 if your assets are covered under Nevada exemptions, and if you qualify based on income.
Nevada Median Income
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To qualify for a Chapter 7 bankruptcy, you must be able to pass a means test. One of the things that this test looks at is your family income. In Nevada, a family of four must earn less than $69,371, or the median income amount for Nevada. The median income for any state is updated often, but changes are gradual. Eligibility for a Chapter 13 is not dependent upon median income.
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