If you are considering filing for bankruptcy it is important that you fully understand what will happen to your assets. The two biggest assets that most people have are their car and their home. Under Nevada Exemptions, these two assets are usually protected from the bankruptcy process. This means that you can keep them if you declare bankruptcy. If you still owe money on the vehicle you may be able to temporarily stop repossession with a bankruptcy stay, while you sort your finances out.
Of course, if still owe money on your house and/or car, you must continue to make payments, if you want to keep them. Otherwise, the lender may repossess or foreclose, and retake it. However, the Bankruptcy will eliminate any further obligation to make payments, if you decide to surrender such asset. It may be a good idea to seek advice from a motoring specialist lawyer to understand your right and your options.
Do You Always Get To Keep Your Car?
Under Nevada Law, the first $15,000 of equity held in a standard motor vehicle is exempt. This means that if your car is worth less than $15,000, it may be classed as exempt. A car that is worth more than $15,000 may also be exempt if your equity (the difference between the value of the vehicle and the amount of money you owe) is less than $15,000. In addition, if you are disabled or one of your dependents is disabled and the vehicle has been specially equipped for use by that person, then it is exempt regardless of its value.
This means that if you are filing for a Chapter 7 bankruptcy, the trustee will not sell your car. Very import to note, not all people immediately qualify to apply Nevada exemptions to their bankruptcy case. Just because one files for bankruptcy in the State of Nevada does not necessarily mean they are eligible for Nevada exemptions. You must have resided in the State of Nevada for two years prior to filing for bankruptcy in Nevada.
Note that if you still owe money on your car and want to keep the financing, then you may need to sign a Reaffirmation Agreement. Such agreement legally obligates you pay all the monies due on the vehicle even after bankruptcy.
Bankruptcy Automatic Stay – Relief from collection activities
In most cases, the filing for bankruptcy automatically imposes a stay against creditors from any collection activity. This stay is automatically applied when a person files for bankruptcy and the purpose of it is to give the debtor the opportunity relief from the harassment of creditors. During this, time the debt should decide whether they intend to retain their vehicle and to continue make payments, or surrender it and stop making payments.
For this reason, it is important that you act quickly and communicate with your lenders proactively to avoid repossession.
The window of opportunity that you have for getting your assets returned is small and any mistakes made during the process could invalidate your claim. If you do get your vehicle returned to you using this rule then you will still have to follow the processes for reaffirming your obligations, and make payments on the loan going forward, to prevent repossession from happening again. Reassess your finances and make sure that you can make those payments before you pursue this avenue.