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COMMON BANKRUPTCY MYTHS

You can file Chapter 7 bankruptcy once every eight years. If it has been less than eight years than your Chapter 7 bankruptcy but you need the protections of bankruptcy again, you may still be able to file a Chapter 13 bankruptcy. The time restrictions are looser on a Chapter 13 because while a Chapter 7 simply liquidates and discharges most of your unsecured debts, a Chapter 13 is a 3-5 year repayment plan.

If you file a Chapter 13 bankruptcy due to the time restrictions on a Chapter 7, you may be able to convert your Chapter 13 back to a Chapter 7 later down the line. Your 8 year period must expire during your Chapter 13 plan, and you must qualify for the Chapter 7 income-wise.

You may see a slight decrease in your credit score immediately after filing your bankruptcy if you have a decent credit score. If you already had a poor credit score, you may see no change or a slight increase after filing your bankruptcy.

Whether your score increases or decreases upon filing, there are always steps you can take to rebuild your credit after filing bankruptcy. You should receive offers for new lines of credit, but can open a secured credit card through your bank if you don’t want to open a new credit card yet. If you keep the same vehicle through your bankruptcy, your lender won’t be required to credit report positive payments after the bankruptcy. If you get a new vehicle after you file, they will. Our office offers $0 down post-filing payment plans, which also credit report to help your score rise after your bankruptcy.

It is common knowledge in the bankruptcy industry that the number one reason people file is because of medical issues. Expensive doctors’ bills, combined with time off of work and possibly living off of creditors, can create a fast-track to bankruptcy for those living paycheck-to-paycheck. Such circumstances are usually unavoidable and NOT a sign of personal failure.

Many successful and admirable public figures have filed bankruptcy. Examples include Abraham Lincoln, MC Hammer, Walt Disney, P.T. Barnum (of Barnum & Bailey Circus), George Foreman, Cyndi Lauper, Willie Nelson, Elton John, Donald Trump, 50 Cent, Kim Basinger, Marvin Gaye, Mark Twain, Toni Braxton, and Isaac Hayes.

You can file bankruptcy singly even if you are married- but you should probably check with an attorney to make sure it is a good option for you. Nevada is a community property state, so even if you opened credit cards and incurred other debts in your name alone, your spouse could still be held liable for them. If you incurred most of your debts before the marriage, single filing bankruptcy may still work for you.

You will probably receive offers for new credit cards once your case is discharged. Once you have wiped your slate clean, creditors know you may have more funds available to open a new line of credit. Opening a new credit card and making timely payments is also a good way to rebuild your credit after the bankruptcy.

If you are unable to get approved on a new credit card, you can open a secured credit card through your bank. You will pre-pay the card, so there is no risk for the bank in issuing you a secured credit card.

If you are interested in filing Chapter 7, there are two ways you can qualify: by making less than the median income level for your family size in your state, or by passing the Means Test. If you are using the first method to qualify, you will need to determine your family size. For the purposes of bankruptcy, only spouses and minor children count as family members, with some exceptions. Adult children and live-in partners won’t count towards your family size (but they won’t count towards your income either).

If you make above the median income level, you may still be able to qualify for a Chapter 7 bankruptcy through the Means Test. This will take mandatory deductions and expenses deemed reasonable by the bankruptcy court out of your income. If the number you have left, or your disposable monthly income, isn’t high enough to pay your debts, you can qualify for a Chapter 7. If you are unable to qualify for a Chapter 7 bankruptcy, Chapter 13 may still be available to you.

You absolutely need to file and pay your taxes if you file bankruptcy (unless you otherwise aren’t required to file taxes). You will need to submit at least 2 years of tax returns just to draft your bankruptcy petition. However, some of your tax debts may be dischargeable. For tax debts to be dischargeable, they must have been due for 3 years, filed for 2, assessed for 240 days, and the filing can’t have been fraudulent.

You will also need to time your bankruptcy filing if you want to make sure that your trustee won’t be able to take your tax return. Filing your taxes, receiving and spending your refund, and then filing your bankruptcy is usually your best bet.

Filing bankruptcy on your own will likely be difficult unless you have an extensive legal background. Filing bankruptcy with an attorney should be a relatively simple process as far as legal procedures go. You should have a good understanding of your financial situation when you have a consultation with an attorney. Your attorney will likely require you to fill out a client information packet so they have basic information for your petition and so they know which documents will be required for your case. You must fill out this packet to the best of your ability, with as accurate names, dates, and addresses as possible.

The attorney will draft your petition, review and sign it with you, and they will file it for you. You will need to attend a 341 Meeting of Creditors, which your attorney will attend for you. As long as you have taken your online credit counseling courses, at that point in a Chapter 7 you are just waiting to be discharged. You will simply continue making your payments in a Chapter 13.

This isn’t even true for Chapter 7. There are two ways to qualify for Chapter 7- by making less than your state’s median income or by passing the means test. The means test deducts mandatory costs from your monthly budget to see if there is enough remaining to pay your debts. Qualifying through income already makes about half of filers eligible, and the means test allows even more to file. Those who don’t qualify for Chapter 7 will likely qualify for Chapter 13. Chapter 13 requires income to make the monthly payments and limits on debt. These limits are $419,275 for unsecured debt and $1,257,850 for secured debt.

Hopefully you will only need to file once, but you can file again if the need arises. There are some restrictions that you must follow.  You must wait 8 years between Chapter 7 bankruptcies. If you absolutely need the protections of bankruptcy again sooner than that, you can file Chapter 13 after 4 years. The waiting periods after a Chapter 13 aren’t as long. You must wait 2 years after discharge to file Chapter 13 again. If you want to file Chapter 7, you will need to wait 6 years from your Chapter 13 filing date.

You will have to list all of your debts in your bankruptcy, including personal loans from family and friends. Paying these debts in favor of the rest of your creditors is referred to preferential or insider payments. You should list all your debts in the interest of transparency to avoid negative consequences in your case.

Some debts need to be fully repaid in Chapter 13, like arrearages on child support and your mortgage. The balance on financed vehicles will also need to be paid in full in Chapter 13. You may end up paying your monthly mortgage in your payment plan, but you won’t have to pay the full balance over the 3-5 years. There will be a minimum amount you need to pay, but you may only end up paying a portion of unsecured debts like credit cards and medical bills.

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FREQUENTLY ASKED BANKRUPTCY QUESTIONS

ANSWER:

A Chapter 7 Bankruptcy is a liquidation of your unsecured debts. Debts that are dischargeable in a Chapter 7 Bankruptcy are credit cards, medical bills, registration loans, personal loans, and some back taxes. Additionally, you will be required to submit a petition with all of your financial information, take credit counseling courses, and attend a 341 Meeting of Creditors in a Nevada Chapter 7 Bankruptcy.

ANSWER:

A Chapter 13 Bankruptcy is a reorganization of your debts. They will be spread out in a payment plan that lasts 3-5 years. If you have any arrearages on your mortgage or other loans, a Chapter 13 gives you the chance to catch up gradually.

ANSWER:

Your payment plan will be determined using your income, reasonable expenses for your family size, and the amount of debt. Any outstanding balance on your vehicles, a fee for the trustee, your arrearages, your attorney’s fees, and a portion of your unsecured debts will be included.

ANSWER:

Keep in mind, there are disadvantages of filing a Nevada Chapter 7 Bankruptcy.  Plus a Ch 7 will remain on your credit for 7 years.  Additionally,  you won’t be able to get a home loan for 2 years. Therefore, if you have an adequate credit score before filing bankruptcy, it will likely decrease immediately after you file. However, bankruptcies are public record, so while your friends and family will probably only find out if you tell them, it isn’t a guarantee.
Some of the advantages of filing a Chapter 7 Bankruptcy include: A ch 7 immediately stops any wage garnishments, repossessions, and foreclosures you are facing. You won’t be required to repay any of your dischargeable debts. Your credit score may improve upon filing if you have a poor credit score to begin with, and will likely raise drastically in the year after you file. Chapter 7 Bankruptcy only requires you to go to court once for a fairly short and simple hearing.

ANSWER:

The Automatic Stay goes into effect once your bankruptcy is filed. It protects you against different forms of debt collection, including wage garnishment, repossession, and foreclosure. The stay remains in effect until your case is discharged or dismissed. At that time, collection on non-dischargeable debts will resume, but collection on dischargeable debts will be halted permanently.

ANSWER:

A bankruptcy means test is used to determine if you qualify for filing bankruptcy in Nevada.  The Means Test will take your and your spouse’s (if applicable) income, subtract paycheck deductions, and also subtract reasonable monthly expenses set forth by the court.
However, even if your income is above Nevada’s median level, you can file a Chapter 7 if the number you reach from the Means Test is low enough. This is not always straight forward, best practice is to contact our Las Vegas Bankruptcy Attorneys for additional information.  Additionally, you should consult a Vegas debt relief attorney to make sure you conduct your Means Test correctly.

ANSWER:

There is no age limit for people who file for bankruptcy, though in some states debtors may have to be at least 18 years old to file bankruptcy.  Both the elderly and young people explore bankruptcy as a debt relief option every year.

ANSWER:

Some debts aren’t dischargeable in a Nevada Chapter 7 bankruptcy. These include student loans, title loans, domestic obligations such as spousal and child support, and back taxes. Some older IRS debts can be discharged if they meet certain requirements. If you have IRS debts you’d like to discharge in a bankruptcy, you should discuss these requirements with an attorney.

ANSWER:

You can pay on your student loans in a Nevada Chapter 13 bankruptcy, but the remaining balance won’t be discharged at the end of your payment plan.  The advantages of paying your student loans in a Chapter 13 bankruptcy is that you won’t have to pay interest and can make up back payments without all of the same penalties that would occur without participating in a Ch 13 Repayment plan.
Bankruptcy can be very instrumental in helping people struggling with student loan debt get back on track.  Especially, when behind on student loan back payments.  A chapter 13 bankruptcy in Las Vegas can help.  Contact our Vegas Zero Down Bankruptcy Attorneys for a free consultation and debt evaluation with our Nevada debt relief team today.

LAS VEGAS

5552 Ashley Creek St
Las Vegas, NV 89135

NORTH LAS VEGAS

7251 W Lake Mead Blvd
Las Vegas, NV 89128

HENDERSON

1489 W Warm Springs Rd #110
Henderson, NV 89014

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