Filing for Chapter 7 bankruptcy can relieve an individual of many burdensome debts and provide hope for the individual’s financial future.
While Chapter 7 bankruptcy, often referred to as “straight” bankruptcy, is typically the most straightforward form of bankruptcy available to an individual, there are still many complex and nuanced procedural requirements that must be met when filing for Chapter 7 in Nevada.
The Las Vegas bankruptcy attorneys at 702-DEFENSE can help guide you through the complicated process and ensure that your debts are relieved to the fullest extent possible and that your assets are protected.
Pre-filing Credit Counseling
In Nevada, any individual filing for Chapter 7 bankruptcy is first required to attend mandatory credit counseling within six months prior to filing. There are many options for completing the credit counseling course and many online courses are offered. For a list of approved credit counseling providers in Nevada, click here.
If exigent circumstances are present, the credit counseling requirement may be waived by the court. After the pre-filing credit counseling course is completed, the next step is to determine whether the individual filing for bankruptcy is eligible to file for Chapter 7 or whether they will need to file for Chapter 13.
Nevada Chapter 7 Means Test
To determine eligibility for Chapter 7, Nevada uses a “means test.” The means test compares the monthly income of the household of the person filing for bankruptcy against the median household income in Nevada. If the individual’s income is lower than the median, typically, the individual will be able to file for Chapter 7.
Nevada Median Household Income
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Even if the individual’s income is greater than the median, they may still be able to file for Chapter 7 depending on whether certain circumstances are present.
To determine whether you are eligible to file for Chapter 7 or Chapter 13, contact us 702-DEFENSE today to discuss your case.
Once the individual has completed the pre-filing credit counseling course and has been determined to be eligible for Chapter 7, the individual must then begin the process of filling out the required paperwork.
The first step in this process will be to itemize the assets, income, and other financial information from the applicant.
The itemization may include:
- Current debts
- Any assets
- Any expenses
- Any loans
Filing for Chapter 7 in Nevada requires many documents to completed and submitted at the time of filing. Some documents due at the time of filing for Chapter 7 include:
- A statement of compliance with the credit counseling requirement.
- A statement of social security form
- Disclosure of compensation of the bankruptcy petition preparer
- Disclosure of compensation of a non-attorney bankruptcy petition preparer (if applicable).
- A creditor matrix form, which includes the name and mailing address of each creditor
- A filing fee of $306
Once the required pre-filing paperwork has been completed, the next step is to file the petition for bankruptcy. The petition will require information regarding:
- Identifying information (including the names, social security number, and the address of the person filing for bankruptcy)
- Whether the individual is filing for Chapter 7 or Chapter 13 bankruptcy.
- The type of debts (consumer or non-consumer)
- Prior bankruptcy history
- Administrative information
The filing of the bankruptcy petition officially marks the start of the bankruptcy proceeding.
For a complete list of the documents due at the time of filing, please refer to the United States Bankruptcy Court, District of Nevada’s website.
Where do you file for bankruptcy in Nevada?
The U.S. Bankruptcy Court for the District of Nevada has two locations. The appropriate location to file the bankruptcy petition is determined by the address of the individual filing for bankruptcy.
If you live in any of the following counties:
The appropriate filing office is the Las Vegas office of the U.S. Bankruptcy Court, District of Nevada, located at 300 Las Vegas Blvd. South.
If you live in any of the following counties:
- Carson City
- White Pine
The appropriate filing office is the Reno office of the U.S. Bankruptcy Court, District of Nevada, located at 300 Booth Street.
The Bankruptcy Proceeding
Once a bankruptcy proceeding has commenced, an “estate” is created. The estate becomes the temporary legal owner of the property of the person filing for bankruptcy.
Generally, the non-exempt property of the estate will be liquidated and used to pay creditors. In every Chapter 7 bankruptcy case, the court will appoint a Chapter 7 trustee. The role of the trustee will primarily be to oversee the bankruptcy case and to liquidate the debtor’s non-exempt assets and distribute the income to creditors. The trustee will liquidate non-exempt assets in a manner that maximizes value to creditors.
Once the petition and the proper documents have been filed with the local bankruptcy court, an injunction will be issued. This injunction, called an “automatic stay,” will prevent creditors from contacting the debtor and from attempting to collect debts. The automatic stay will also put a temporary hold on foreclosures, wage garnishments, utility disconnections, and evictions.
However, the automatic stay will not suspend all proceedings. Some proceedings that will not be suspended include IRS tax audits, criminal proceedings, and lawsuits pertaining to paternity, child support and alimony.
If all of the debtor’s property is exempt, the Chapter 7 trustee will file a “no asset” report. If a “no asset” report is filed, there will be no distribution to creditors.
If, however, the debtor owns non-exempt property that will be subject to liquidation, creditors must file claims to preserve their interest in the property.
Nevada Meeting of the Creditors
In Nevada, individuals filing for bankruptcy will be required to attend a meeting of the creditors. The meeting of the creditors, often called the trustee’s meeting, will be presided over by the trustee. At the meeting of the creditors, the trustee and any creditors will have the opportunity to investigate and inquire into the financial condition of the person filing for bankruptcy.
Even though the name suggests otherwise, from a practical standpoint, few creditors actually attend the meeting of the creditors. During the meeting, the trustee will review the documents and financial disclosures filed by the individual in order to determine whether the individual filing for bankruptcy has improperly concealed or disposed of any non-exempt assets.
The trustee is required to ask the individual filing for bankruptcy several questions, including:
- Whether the individual listed all of his or her assets.
- Whether the individual listed all of his or her debts.
- Whether the the documents the individual submitted are accurate.
The individual filing for bankruptcy will be required to answer these questions, and more, under oath during the meeting. The trustee is not limited to asking the pre-determined questions required by law. The trustee may also ask questions specifically about the individual’s debts and other personal information.
Liquidating Assets and Discharging Debts
Under section 726 of the bankruptcy code, a creditor’s claim to the property of the bankruptcy estate are organized into six hierarchical classes. Creditors with the highest class of claim will be paid first. Once each creditor with the highest class of claim has been paid, the next class of claims will be paid, and so on until the assets of the bankruptcy estate are exhausted.
Generally, many of the individual’s debts will be forgiven in a Chapter 7 case. Once a debt has been discharged, creditors may no longer attempt to collect that debt through legal actions or other methods.
However, not all debts may be forgiven in a Chapter 7 bankruptcy. Some common debts that may not be forgiven include:
- Alimony and child support debts
- Student loan debts
- Penalties and fines from violations of the law
- Income tax debts
- Damage awards
Why should I Hire an attorney?
The Chapter 7 bankruptcy process in Nevada is complex and intricate. There are many procedures that must be followed closely when preparing the documents required to file for bankruptcy. It is imperative that you know whether your property is exempt or subject to liquidation and whether you have debts that cannot be discharged.
It is important to understand what property might be protected and what property might be subject to liquidation. The experienced Nevada bankruptcy attorneys at 702-Defense can guide you through the complex Nevada bankruptcy procedure and ensure that your property and your assets will be protected from creditors to the fullest extent possible. To discuss your individual circumstances, contact the firm today.