I am a Las Vegas litigation attorney. I often get asked questions about bankruptcy law, foreclosure, and loan modifications. This blog will shed light on these topics. Disclaimer: Nothing in this blog should be construed as legal advice or consultation. No attorney-client relationship is formed through this website or blog.
Most bankruptcies fall into two categories: Chapter 7 or Chapter 13. A Chapter 7 proceeding is a liquidation process where assets are sold to pay off debts. A Chapter 13 proceeding is a reorganization process where one may be able to keep their property but a payment plan is implemented to pay off debts in three to five years.
Filing for bankruptcy initiates a protection called an "automatic stay." This prohibits creditors from seeking payment for debts, including litigation initiated to collect debt. Under certain circumstances, the automatic stay can be lifted but only by the bankruptcy court.
Not all debts can be eliminated by filing for bankruptcy. Credit card debt, unsecured loans, and other debts can be wiped out; however, other debts such as child support, alimony, and taxes cannot. Student loans can be forgiven when it is shown that the debt causes an undue burden on the debtor. This is very difficult to establish and thus, student loans are rarely discharged in bankruptcy. A creditor can also claim that a certain debt should not be discharged through bankruptcy, and it can survive a petition for bankruptcy.
Fraud in a bankruptcy petition may cause the court to dismiss the petition without eliminating any debts. By far the most common scenario of bankruptcy fraud is concealment of assets. This includes failing to list all assets or transferring money or properties to relatives or friends so that assets cannot be liquidated.
Bankruptcy fraud is a felony that carries a sentence of a fine of up to $250,000 and/or five years in prison.
I'm curious as to how loan modification and bankruptcy are different in Nevada than in other states.
ReplyDeleteThis is very enlightening, and gives some insight into the bankruptcy procedure.
ReplyDeleteAll of this sounds like a very complicated subject, I know one thing I hope I never have to go through a bankruptcy.
ReplyDeleteBankruptcy law is federal but state law can provide certain protections. For example, in Nevada, the homestead exemption is $550,000. In contrast, in Ohio, until recently the homestead exemption was $5,000. It is now $20,200 in Ohio. However, in 2005, federal bankruptcy law was amended so that the state homestead exemption is limited to $125,000 if the debtor moved within 3 years and 4 months of the bankruptcy and in certain other limited circumstances. This was designed to prevent debtors from moving to another state with a better homestead exemption before filing for bankruptcy.
ReplyDeleteWow, what a very well organized and informative blog. This information is definitely relevant especially in light of the current conditions in Nevada. Awesome job! I look forward to following your post and learning more about the law!
ReplyDeleteI love the information that you've shared. Like mentioned, your blog is very well organized and it seems to have a wealth of information. I'm looking forward to reading your other posts.
ReplyDeleteThank you! Stay tuned for more information on the Obama administration's response to the foreclosure crisis.
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