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Will I Lose My Pets If I File For Bankruptcy

Will I Lose My Pets if I File for Bankruptcy?

Even though pet owners generally regard their pets as members of their family, under the law they are downgraded to personal property. The strong bond between an owner and a pet is not reflected in the bankruptcy code. Depending on the type of pets you own and how they function in your life, you may find yourself in a position where they become an asset. While most domestic pets like dogs, cats, birds, and other small animals do not qualify as assets, farm animals such as horses and livestock would qualify if they were essential to your source of income. Rest assured, however, that most trustees will not sell your pets to pay a debt.

When Animals Become Assets

Filing for Chapter 7 bankruptcy means all of your assets become the property of the estate.  Since animals are personal property, they qualify as assets except when they are considered to be exempt property. Under federal and state law, bankruptcy does not prevent you from having the basic items that you need for living and working. While most states don’t have an exemption specific to pets, something called a wildcard exemption allows you to place a certain dollar value on your personal property.

The Wildcard Exemption

Nevada has the wildcard exemption, meaning that your pets can be valued under your personal property. Nevada considers dogs, domestic animals, and birds to be domestic property under N.R.S. 193.021. The only problem may be the allotted amounts – $10,000 for individuals and $20,000 for couples. As long as you don’t have a lot of other personal exemptions to make, such as expensive cars, firearms, or other property, you can claim your pets under this option.

If you happen to be a farm owner in Nevada, there is a special exemption for you called Tools of Trade. Up to $4,500 may be exempted from farm trucks, stock, tools, equipment, and seed. Depending on how you value your property, your livestock could fall under this umbrella. In addition, the Homestead exemption in Nevada is $605,000, a huge amount compared to other states’ allotments. Nevada has opted out of the federal bankruptcy exemptions, so they would not apply.

Pet Care Expenses

The difficulty comes when your pets are a special needs situation or if they require special care, or if they have caused you to have debt. Average pet expenses (food, medical, licensing) should be within the IRS standards, but extenuating circumstances like large vet bills can be listed as special circumstances if you can validate them. For example, unnecessary expenses like a dog-walking service or grooming would not work, but medical conditions requiring vet visits and medication are necessary. 

When livestock comes into play, however, you need detailed per-month expenses. Livestock is a tricky situation, however, if your animals aren’t worth much. In some cases, the trustee may decide to abandon them, though this isn’t bad like it sounds.

Abandoning Animals

Often, when things are too difficult to sell, the trustee decides to abandon it, meaning you get to keep the property. The trustee will file a Notice of Abandonment and list the animals accordingly to indicate them as non-liquid items. However, if your animals are at all valuable, the trustee may decide to explore the possibility of selling them to eliminate debt. As long as you own your animals and they are not a liability, in most cases they are safe.

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