An introduction to Consumer Law

Nevada Legal Services offers a broad range of legal assistance through its Consumer Law Project. We can assist you with: contesting a debt collection amount arising from medical costs, credit cards, unpaid rent, towing costs, car repossession costs, unpaid HOA dues, or utility bills; disputing incorrect or fraudulent credit report information; answering a lawsuit for consumer debt related to a contract breach, unpaid rent, or a mechanic’s lien; negotiating debt relief settlements; representation in foreclosure mediation; explaining your rights as a homeowner to pursue loan modifications, reverse mortgages, property transfers, and warranties; eviction record sealing; filing a chapter 7 bankruptcy; advising on resources and steps to take when identity theft occurs; filing quiet title actions or mobile home title disputes; disputing check dishonor; advising of your RESPA rights as a successor in interest; reviewing and assisting with insurance coverage disputes; sending cease-and-desist letters to data brokers; and, guiding you with your small claims disputes.

CLP team answers common questions: (bankruptcy edition)

What is the difference between Chapter 7 and Chapter 13: what’s right for me?  

A Chapter 7 Bankruptcy eliminates most ordinary consumer debt and allows you to keep “exempt” property. The consumer may need to surrender non-exempt property or pay for the right to keep it. A bankruptcy trustee may collect and sell your non-exempt money and assets, and then use the proceeds to pay your creditors. Often, the non-exempt money and assets do not fully compensate the creditors and the bankruptcy discharge cancels the remaining balance.

Many bankruptcies are “no asset” where the debtor does not have any income, or where the debtor’s assets are exempt. Plainly speaking, “no asset bankruptcies” means that all of the debtor’s assets are protected and retained post-bankruptcy, while the creditors receive nothing. All debts listed are then discharged. With “no asset” bankruptcies, where no assets are distributed to creditors, debt from creditors not listed in your bankruptcy papers is discharged as well (in the case where a potential creditor is forgotten or unknown at the time of filing). In re Beezley, 994 F.2d 1433 (9th Cir. 1993).

Chapter 13 Bankruptcy works to rearrange debts on a secured asset, such as a car or a house. Or, if you make more money than qualifies you for a Chapter 7 (determined by the “means test”), then Chapter 13 is a process of rearranging of debts for the debtor to pay back over a time period their priority creditors. Generally, Chapter 13 creates a payment plan to your creditors over a period of 3 years. You can ask for a 5-year period to pay off debt at the Bankruptcy Court’s discretion. The resulting Chapter 13 payment plan should ultimately make you current with your creditors.

I already got a Chapter 7 Bankruptcy; how long can I wait before I do another Bankruptcy?

You must wait a minimum of 8 years before you can file for Chapter 7 Bankruptcy.

If you got a Chapter 13 Bankruptcy, you must wait 2 years from the discharge date to file a Chapter 7 Bankruptcy, or 4 years from the date of dismissal of the filing.

I am being sued for debt, how will a Bankruptcy help?

Bankruptcies may stay the furtherance of judicial proceedings. There is a period of an automatic stay which pauses any further action that may take place which applies until the discharge or dismissal. It can take anywhere from 4-6 months from the filing of a Chapter 7 Bankruptcy Petition until a discharge occurs. However, if you file a Chapter 13 Bankruptcy Petition, a stay of judicial proceedings for debt may be stayed for the duration of the repayment period until the discharge. A Chapter 7 Bankruptcy requires that all secured debts (real property and certain personal property such as your vehicle) to be current and not in default for the asset to remain in your estate.

I am in default and may lose my house due to foreclosure, how will a Bankruptcy help?

Bankruptcies may halt even nonjudicial foreclosure processes. A Chapter 13 Bankruptcy is an option that can prevent a resulting foreclosure if a payment arrangement can be determined between the debtor and the trustees. A Chapter 13 Bankruptcy Petition is discharged after the completion of the payment arrangement, generally after 3 years. Nevada Legal Services does not currently offer filing assistance for Chapter 13 Bankruptcy, but you may reach out to the Nevada Referral Service at 702-382-0504 to get a Bankruptcy attorney recommendation. However, we can assist with representation at a Foreclosure Mediation, which is another way to create a payment arrangement to get caught up on mortgage arrears. There are time restraints on when a Foreclosure Mediation Petition can be filed, however. If you receive a Notice of Default, please reach out to a legal professional immediately to discuss your options.

I am already being garnished, and I really can’t afford to have my paycheck garnished.

Bankruptcy may be right for you, and we may be able to get a few withdrawn payments back once the Petition has been filed. A Bankruptcy filing will pause any further garnishments and discharge that current debt if the Court determines that you are eligible for debt discharge.

How much do I need in debt before I qualify for a Bankruptcy?

Not much! It depends on your own financial goals. If your debt is past what your income is or is affecting your life negatively daily (creditors calling, cannot get housing or a car, you are struggling to feed yourself and your family), then it is a good idea to get a legal consultation about your bankruptcy options. We offer free legal advice, or you may reach out to the Nevada Referral Service at 702-382-0504 to get a Bankruptcy attorney recommendation.

How does a Bankruptcy affect my credit score and how long will it be affected? Can I still build credit?

Once you file for bankruptcy, your score will likely drop 100-200 points. The filing will appear in your Credit Report for 10 years. However, you can still build your credit score during this time. We recommend building credit through a secured credit card (one where you can put a deposit down and pay from those allocated funds, or a pay-as-you-spend credit card).

I obtained a debt discharge, but I have creditors still reaching out about the discharged debts.

You may send a copy of your discharge statement to those inquiring creditors and advise that if there is any continued contact, they will be violating the FDCPA.

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