Chapter 7 Bankruptcy
Chapter 7 is a liquidation bankruptcy option for those with limited income providing the possibility to eliminate certain types of unsecured debt.
People with income below the state’s median have the best opportunity to qualify for Chapter 7 bankruptcy in Las Vegas, but they are also required to pass a means test. A means test will determine if there is enough disposable income to repay debts rather than Chapter 7 liquidation. A Chapter 7 filing could be denied if household income is above the median or a judge finds that there is sufficient income to make payments on debt. In certain situations, those with a higher income may still be allowed file for Chapter 7 depending on circumstances, while others may be able to file for a Chapter 13 instead
Unsecured debts that qualify for liquidation include credit cards, loan payments, or medical bills. Debts that cannot be liquidated include child support, spousal support, tax debt, or student loans. In some cases, unsecured debt remaining after completion of property liquidation can be discharged, however secured debts will not be eliminated.
In order to complete the bankruptcy liquidation, a Bankruptcy Court judge assigns a trustee to take control of selling many, if not most, of the debtor’s non-exempt property and then distribute those funds to creditors. Examples of non-exempt property include personal or household goods, expensive clothing or jewelry, collector items, valuable artwork, property not considered the primary home, or new model vehicles with equity.
Under Chapter 7, there are many types of personal property that are considered exempt from liquidation, but at limited values. Examples of property exemptions in the state of Nevada include:
- Homestead – up to $550,000 in equity of a house, condo, or mobile home
- Vehicles – up to $15,000 of equity; unlimited for vehicles equipped for permanent disabilities
- Personal Property
- up to $12,000 in necessary household goods, furniture, appliances, electronics, clothing, yard equipment
- up to $5000 in books, jewelry, musical instruments, and art
- all family pictures or keepsakes
- medically prescribed heath aids,
- up to $4500 in farm tools, vehicles, equipment, and stock
- up to $10,000 in items used for the debtor’s trade or business including tools, equipment, supplies, materials, books, and any uniforms or arms you are required to keep
- one gun
- up to $16,150 in personal injury compensation or restitution from personal injury or wrongful death
- Retirement Accounts – fully exempt for state employee’s, most tax-exempt retirement accounts, up $1,283,025 in IRAs and Roth IRAs
- Wages – 75% of disposable earnings or amount equal to 50 times federal minimum wage