What is a Chapter 7 Bankruptcy?
Individuals or married couples can file for bankruptcy protection under Chapter 7 if they meet the Nevada “means” test, meaning their income is below the state median income.
If you qualify, your debts are discharged, which means they go away. You never have to pay back those credit card payments. However, if you have assets in excess of the allowable exemptions, the bankruptcy trustee will seize those assets and sell them to pay your creditors.
The terms “seizure” and “liquidation” sound frightening, but if you’re eligible for Chapter 7, you likely don’t have assets in excess of the allowable exemptions, so nothing will be seized. The nickname of “liquidation bankruptcy” is often a misnomer. Nevada has very generous property exemptions.
Can I keep my house and car if I file for bankruptcy?
You can, likely, keep your house and car when filing for bankruptcy if you can pay any missed payments and make future payments, along with other financial responsibilities such as a Chapter 13 repayment plan. You will be required to reaffirm the debt of the mortgage and car.
In a Chapter 7 bankruptcy, if your equity in the house and/or car exceeds the allowable exemptions, your bankruptcy attorney may be able to help you purchase it at the fair market or wholesale price, not what you owe on it.
How do I stop creditors from calling?
As soon as you file your bankruptcy petition and it’s accepted, the court will issue a “stay.” This means that all attempts to collect debt against you must stop immediately. Phone calls, letters, law suits, foreclosures, and most garnishments will cease.