What is Chapter 7 Bankruptcy?
Chapter 7 is the most common form of bankruptcy, where debtors can discharge almost all their debt while protecting important assets.
Chapter 7 can only be used if your income is below a certain threshold, or, if pass the “means test.” Eligibility is calculated on your monthly income over the last six months (“median”); however, if you exceed the median, you may still qualify under the ‘means test’.
You cannot file chapter 7 if you have received a chapter 7 discharge in the last 8 years or a CH13 discharge in the last six years; and if a prior bankruptcy filing was dismissed by a judge within the last 180 days under certain circumstances, such as fraud.
Once you file, an “automatic stay” is in place, which prohibits most creditors/debt collectors from pursuing you. Creditors can be punished if they contact you after the automatic stay is in place.
Debtors do not lose everything in a Chapter 7 bankruptcy, as certain property is “exempt”. Those exemptions are listed in NRS. 21.090.
The Bankruptcy Code outlines debts that are non-dis chargeable, which generally relate to social services (child support, certain IRS taxes, alimony, etc).
As for secured debts, (mortgage, car loan, etc), if you are current on payments you keep the property but must continue making the payments; however, if you are not current, the creditor may foreclose on the property and repossess.
Bankruptcy may not be the best option for you, so weigh your options carefully prior to taking action.