Are you concerned you may have to give up your property if you file for protection under Chapter 7 or Chapter 13 of the bankruptcy code? One of the common concerns among anyone contemplating bankruptcy is whether or not they will lose their possessions during the process. Thankfully, the purpose of bankruptcy is to give you a fresh financial start which would hardly be possible if the end result cost you everything you owned. That's why there are a number of exemptions under Nevada law that will allow you to keep certain property.
How Do Bankruptcy Exemptions Work in Nevada?
The federal bankruptcy code contains a long list of exemptions that pertain to all types of property. However, it is important to understand that the State of Nevada has opted out of these exemptions and relies exclusively on the exemptions written into state law. This wrinkle in Nevada law makes it important to speak with an attorney who has experience with Nevada bankruptcies, as knowledge from other states won't always transfer well.
Although you can't use federal bankruptcy exemptions, you can still rely on federal exemptions that apply outside of bankruptcy court. This includes protections for survivor's benefits as well as federal retirement accounts. What's more, married couples that file jointly for bankruptcy can double the exemptions outlined in state law for property that is owned by the couple.
What Property is Exempt in Nevada?
Here are some of the most commonly used exemptions under Nevada Law:
Typically the largest and most important exemption you might use in your bankruptcy is the homestead exemption. The homestead exemption allows you to exempt up to $550,000 in equity for your home, mobile home, or condominium. Equity is the value of your home above and beyond what you currently owe on it. For example, if your home is worth $500,000 and you owe $450,000 on your mortgage, you have $50,000 of equity in your home.
There are some exceptions that apply to the homestead exemption. For starters, a couple that joint files may only claim one homestead exemption. That exemption must be for your primary residence and cannot be used on commercial real estate or rental property. It's also worth mentioning that this exemption will only protect you from unsecured creditors attempting to reach the equity in your home. The homestead exemption does not nullify your mortgage debt.
Nevada has a number of personal property exemptions which carve out protections for individual items of personal property that you may own. Some common personal property exemptions include:
- Funds held for funeral services
- Keepsakes, photographs, and mementos
- Criminal Restitution
- Up to $12,000 for household goods
- Up to $16,500 for personal injury awards
There are some exceptions to these personal property exemptions. For example, you can get an exemption for one firearm, but all other firearms you own are not exempt. You can exempt up to $5,000 in art or jewelry, but anything above that amount can be reached by your creditors.
Another major exemption that is frequently used may cover your car. Nevada has an exception for up to $15,000 of equity in your vehicle. The equity in your vehicle works just like it does with your home, in that it is the value of your car minus your outstanding loan. It's common for vehicles to be worth less than what is owed on the note, so the vehicle exemption covers the entire car more many Nevada debtors. There is also a special exception for disabled persons; Nevada law allows them to exempt unlimited equity in their vehicle.
As we mentioned above, federal retirement accounts are exempt under federal law. But Nevada law has some exemptions of its own that relate to retirement accounts. For starters, the retirement accounts of state employees are also fully exempt. There are additional exemptions for certain retirement vehicles like IRAs and Roth IRAs below a specific dollar amount as well. For more information, discuss your retirement accounts with an experienced Nevada bankruptcy attorney.
Nevada bankruptcy exemptions also protect your wages, but with some important exceptions. Under Nevada law, you can exempt the greater of:
- 75% of your weekly disposable income, or
- 50 times the federal minimum wage of $7.25 per hour
The amount of your exemption is the total amount each week that cannot be garnished from your wages. Unfortunately, it is possible for creditors to reach the remainder of your paycheck. The court has some leeway when it comes to wage exemptions for low-income debtors.
Tools of the Trade
There is also an exemption for tools of the trade that you would need to keep in order to perform your job. Some examples of tools of the trade that are exempt include:
- Up to $4,500 of equity in farm tools, trucks, equipment, seed, or stock
- Up to $4,500 of equity in a prospector's mining gear, dwelling, tools, or mining claim
- Up to $10,000 in inventory, equipment, or supplies
- All uniforms and accessories required for your job
The “Wild-Card” Exemption
Finally, Nevada law offers some flexibility for property that doesn't qualify for any other exemptions. Known as the “wild-card” exemption, you can exempt any property that is otherwise not exempt for up to $10,000. This can be for cash or equity in non-exempt personal property like a second firearm or a car with more than $15,000 in equity.
Have Your Exemptions Questions Answered by a Nevada Bankruptcy Attorney
There are a lot of conditions and exceptions when it comes to exempt property in a Nevada bankruptcy. It's no simple task keeping track of it all, and an untrained eye might miss an important exemption. The possibility of losing property that could potentially have been exempt is reason enough to discuss your circumstances with a Nevada bankruptcy attorney.
Attorney Rory Vohwinkel has a wealth of experience representing debtors in Nevada bankruptcy proceedings. To discuss your options for getting the financial fresh start you need, contact Vohwinkel Law today at 702-735-1500 to schedule your free consultation.