If you are forced to settle your debts through bankruptcy, the state of Nevada offers several key benefits that might make a huge difference in the final count.
Bankruptcy is an ugly word that nobody wants to think about. It isn’t easy to admit that your debts are too large to handle and that you need legal protection to see them through. However, this mustn’t prevent you from learning all the relevant details about the regulations in your local jurisdiction, since that could easily lead to missed opportunities. There are a lot of misconceptions about bankruptcy that are causing people to resist initiating it, even when this is a rational thing to do. A factor that further contributes to the confusion is that every state has its own system – so things you read about bankruptcy might not necessarily be true in your place of residence.
The state of Nevada is a better environment to file for bankruptcy than most other U.S. states. Thanks to a large number of exemptions written into state law, it is possible to keep a large portion of your property while you undergo this process, making it easier to get back on your feet once you reimburse all the standing debt. That’s especially true if you select chapter 13 bankruptcy, which is available to a majority of local residents, even if they own a good deal of property.
In order to make a well-informed decision, you should carefully examine all the relevant provisions of Nevada’s chapter 13 bankruptcy and find out which of them are applicable to your situation.
Reasons to File for Bankruptcy
Obviously, the main reason to go through the proceedings is accumulated personal debt. In order to avoid lawsuits from your creditors that could wreck chaos upon your finances, it makes sense to declare yourself unable to meet your obligations at once and ask for the courts to provide you with temporary relief. That enables you to maintain a semblance of control over your destiny and delay payments for a reasonable amount of time, providing you with some space to start solving the problem. On the flip side, you will be forced to open up your wallet to external control, and a good chunk of future earnings will go directly towards settling the debt.
Despite the popular perception that only totally cash-strapped people go through bankruptcy, the truth is that such an option could be smart even for those with a healthy income. It’s all about bringing the overdue debts under control, and there are sizable financial incentives for this type of intervention for people from all social strata. There is no shame in filing for bankruptcy and admitting that you aren’t in position to continue balancing between revenues and expenses. In fact, such a move could help you get your finances in order much faster than if you tried to negotiate with every creditor individually.
How Nevada Differs From Other States
Few people are aware of it, but U.S. bankruptcy laws are mostly left to states to enforce as they see fit. That’s why it is mandatory to learn about local variations before you decide which option would be the most suitable for your particular case. Nevada residents are lucky to enjoy some of the most lenient regulations in the country, which pertain to valuable property in your ownership that is protected from creditor’s claims. As opposed to many other states, Nevada lets indebted individuals keep their homes (up to the value of $550,000) and other exempted classes of assets if certain conditions are met throughout the repayment period. It is even possible to keep a vehicle worth less than $15,000, which can be a real game changer. Other types of personal property (for example home appliances) also fall into the category of exempted assets and can’t be repossessed no matter how large your debt is.
Of course, bankruptcy rules in Nevada are not uniform and certain eligibility criteria must be satisfied for some of those favorable provisions to apply. For the start, it is necessary to ascertain which type of bankruptcy plan you are entitled to and which protections outlined in the existing bankruptcy plans are more valuable to you. By providing different bankruptcy schemes intended for different citizens, Nevada is expanding your range of options, but it’s still up to you to use them wisely and settle your financial commitments as quickly as possible. One important feature of Nevada legislation to keep in mind is that you can’t apply for federal exemptions and must play by local rules if your case is heard in this state, unless you just moved in from another part of the country.
Choosing Between Chapter 7 and Chapter 13
The most important decision you need to make is to decide which type of bankruptcy settlement you should seek. Both Chapter 7 and Chapter 13 can be attractive options in their own way, but they provide quite different protections. Chapter 7 bankruptcy (also known as liquidation) is available to low-income debtors and it carries a possibility of partial debt cancellation, but at the cost of losing all non-exempted assets. Quite conversely, Chapter 13 is defined as ‘debt adjustment’ and open to a wider category of people (though not to real estate developers, for example). In this scenario, you are basically settling all of your debts with a single monthly payment, with the repayment period agreed in advance.
You need to be realistic when choosing the bankruptcy plan, as filing for the wrong one could put you in deeper trouble down the line. Those who opt for Chapter 13 have to be prepared to pay the agreed installment over the period of next three to five years, with severe penalties if the obligations are not met in a timely manner. If you are pursuing this type of bankruptcy, you should think carefully whether this kind of settlement serves your best interests and then set up a plan that doesn’t exceed your ability to pay. In the long run, it is much better to extend the period a bit than to be overly ambitious with the monthly figure and fail after a few months.
Key Benefits of Chapter 13 Bankruptcy
As was previously mentioned, the most significant advantages of Chapter 13 bankruptcy is that you don’t have to surrender all of your non-exempted property and your paychecks aren’t automatically blocked as soon as you get them. In fact, if you agree to the appropriate repayment plan, it is possible to keep possession of your entire asset portfolio as well as control over your finances. In a way, living with Chapter 13 is similar to having a large bank loan that comes due once per month, only in this case the payments are strictly supervised by the judiciary branch. It is undoubtedly still a burden on the monthly budget and a constraint on your financial freedom, but at least it’s not a hard reset of your independent decision-making like some other bankruptcy deals.
Just as importantly, there are no limits how many times you can apply for it, which is not the case with other types of bankruptcy. Individuals that have already filed for bankruptcy in the past 6-8 years can’t apply for Chapter 7 again, but there are no such limitations for Chapter 13. The protections of this bankruptcy settlement will also keep your home free from foreclosure, while your co-debtors will also be covered if the repayment plan is for the entire sum you owe. Furthermore, it might be possible to deduct certain expenses from the final tally, but again only if the required conditions are met.
Filing for Bankruptcy Protection in a Nevada Court
Everywhere in the United States, bankruptcy cases are handled exclusively by federal courts and Nevada is no exception in this sense. The state has two U.S. Bankruptcy Courts, one located in Las Vegas and the other in Reno, so you will have to file your request to one of them. Of course, you won’t have to physically travel to one of these cities, since all relevant documentation is available through electronic means. That said, there are many attorneys specialized for this type of legal work throughout Nevada and it shouldn’t be too hard to find one no matter where you live.
While filing for bankruptcy is a good way to limit your liabilities, there are certain expenses associated with the procedure that you need to take into account. Mandatory taxes will take up little more than $300, while attorneys usually charge northwards of $1,000 although the exact figure greatly depends on the law firm in question, as well as the location. Despite the costs, it is probably a good idea to discuss your case with a qualified legal professional before you file an application, since the law proscribes a lot of different opportunities to limit your liabilities and secure the most favorable deal for repayment of your debt. Most importantly, you shouldn’t delay your decision since the situation can only worsen as the time passes and your creditors start pressing to get paid.