Without Nevada bankruptcy exemptions, for a Chapter 7 bankruptcy filing, you would have to give all of your property to the trustee who would then sell of your property and (minus a 10% fee) the trustee would then use the proceeds of the sale to pay off the creditors.
Of course, if this were to occur, bankruptcy would only be feasible to either a small percentage of debtors or the very desperate. Luckily, Nevada bankruptcy exemptions, for the vast majority of Chapter 7 filers, allow you to keep all of your property.
Before I explain, in more detail, what exactly exemptions are, it is helpful to learn some background information. A debtor’s estate is formed once you file a chapter 7 bankruptcy. This debtor’s estate is controlled by a bankruptcy trustee. The bankruptcy trustee, after you file, technically owes all of your property and, if the trustee would sell all of your possessions, through liquidation, for the benefit of your creditors.
However, exemptions allow you keep necessities, which are needed for you to start fresh after your bankruptcy discharge. For example, in Nevada, most debtor’s furniture is protected by Nevada bankruptcy exemptions ($12,000 of furniture is exempt); but, Nevada’s exemptions do not allow you to keep a boat or a timeshare.
Federal bankruptcy law allows a state to use federal or a states bankruptcy exemption. However, the bankruptcy laws give each state the right to have their own exemption statutes, and in Nevada, you are only able to use Nevada’s exemptions. Therefore, most state’s exemptions will vary. Some states are more generous than others in the amount of property that can be exempted. For example, Nevada exemptions allow you to keep a car that has equity up to $15,000. But, Michigan’s automobile exemption is only $3,500.
To use a state’s exemptions, you must live in that state for three years. So, to avoid disastrous consequences, if you are contemplating bankruptcy it is highly recommended that you set up a free consultation with a bankruptcy attorney from Las Vegas (assuming you live in Vegas) or wherever you currently live.
Equity-For exemptions that are limited in scope the amount is determined by the equity that you have in that certain classification of property. For property that you own, free and clear, the equity is simply the fair market, value of your property. Secured property is property where a lienholder or creditor has the right to seize property when you are behind on your payments. With secured property, equity is determined by the market value of your personal property minus the outstanding value of all liens on your property. I.E., Your auto’s market value is worth $14,000, and the creditor’s lien is $10,000, your equity for your car would be $4,000.
Some of the most popular exemptions, for Nevada, allow a bankruptcy filer to retain furniture worth up to $12,000, $16,150 of a personal injury reward, a single gun, up to $5,000 in equity for art, books, jewelry and musical instruments, and $10,000 for tools of your particular trade. (“Tools of the Trade” range from a mechanics “Snap-On” tools to a software programers laptop.) Nevada also has a generous, $550,000, real estate exemption. Please note, the $550,000 only applies if you have filed a declaration of homestead and that you reside in the property that you are declaring is exempt.
There are also some exemptions that are virtually unlimited. Prime examples of these are health aids; restitution received as payment from you being a crime victim, money held in deposit by a landlord, and automobiles that are equipped for the disabled. It is also interesting to note that Nevada bankruptcy exemptions allow you also to keep one gun selected by the debtor. So, as I read this statute, a firearm worth thousands of dollars may be exempt.
You can keep nonexempt property or property that is not fully covered. However, if you want to keep it, you will have to pay the trustee the market value for the non-exempt property.
Nevada has a very generous, $10,000, wildcard exemption. The wildcard is essentially a catch-all that allows you to exempt any property that is either not specifically covered by an exemption, or the exemption does not fully cover property that you want to keep. Example- You want to file bankruptcy. But, your dream car has equity of $20,000. As it was stated earlier, Nevada’s automobile exemption is limited to $15,000. Thus, if $5,000 of the wild card is applied to the car, you’ll be able to keep your car and you will also have $5,000 left for any other non-
Popular Nevada Bankruptcy Exemptions
Below are some of the more popular exemptions:
- Funeral plot and funeral service contracts that are held in trust.
- Keepsakes and pictures worth up to $5,000.
- Libraries, art, jewelry and music instruments whose value does not exceed $5,000.
- Unlimited, unemployment compensation, and voc rehab support.
Exemptions must be used at the time of filing, or you will be taking a risk that they may not be able to be even used. So, unless you have very sparse property, it is wise that you hire an experienced bankruptcy lawyer who lives in Las Vegas. And also even if your possessions are limited, as you will be discharging potential six figures or more of debt, it makes good financial sense to hire experienced legal representation to file your bankruptcy.
Source: Click here to see Nevada bankruptcy exemption statute.