To begin the bankruptcy process in Nevada, a debtor must first file a petition and other necessary paperwork with the U.S. Bankruptcy Court for the District of Nevada, located in both Las Vegas and Reno. Individuals typically choose to file for either Chapter 7 or Chapter 13 bankruptcy. In Chapter 7, a court-appointed bankruptcy trustee collects the debtor's nonexempt assets, if any, and liquidates them to pay the debtor's creditors. Any debts left unpaid are discharged, extinguishing the debtor's liability. If a debtor files for Chapter 13, he doesn't have to give up any of his assets. Instead, he enters into a repayment plan that lasts three to five years. As with Chapter 7, any debts left unpaid are discharged.
Once the bankruptcy petition is filed, a debtor must complete a number of follow-up steps. With Chapter 7, a debtor must also submit paperwork listing the exemptions he would like to claim -- categories of property he may protect from seizure, up to a certain value. Some states allow debtors to choose between federal and state exemptions; however, Nevada debtors can only use state exemptions. A commonly used one is the homestead exemption, which enables debtors to protect their home, up to $550,000 in equity. However, debtors must have lived in the state for at least 40 months before they may claim this exemption. This is to prevent out-of-state residents from moving to Nevada for the sole purpose of filing for bankruptcy and claiming this exemption. With Chapter 13, debtors must submit a repayment plan to the court within 14 days of filing their petition.
Once a debtor files for bankruptcy, regardless of type, the bankruptcy court sends official notice of the filing to the debtor's creditors. A meeting of the creditors, also known as a 341 meeting, is then scheduled. For Chapter 7 debtors, the meeting takes place approximately three to six weeks after filing; Chapter 13 debtors should expect to wait six to eight weeks after filing. At the meeting, attended by the bankruptcy trustee and debtor, the debtor is placed under oath and the bankruptcy trustee conducts an examination of his assets and liabilities. Creditors can attend the meeting and ask the debtor questions under oath if they choose.
After the 341 meeting, creditors have 60 days to either file an objection to the bankruptcy discharge or file a "non-dischargeability" action for certain debts. When a creditor files a non-dischargeability action, it is asking the court to disqualify -- or exclude -- a specific debt from discharge, keeping the debtor liable for the debt. In most Chapter 7 cases, no motions are filed and there are no assets to distribute to creditors. As a result, debtors typically receive a discharge after the 60-day objection period ends, usually within three to six months. With Chapter 13 cases, the bankruptcy court must hold a confirmation hearing no later than 45 days after the 341 meeting and decide whether the repayment plan is feasible. If the court approves the plan, the debtor begins repayment. If not, the debtor usually submits a new repayment plan. Once the debtors completes his repayment plan, usually within three to five years, he receives a discharge.