If overwhelming debt has put you at a financial crossroads in Las Vegas, bankruptcy may provide the legal relief you need. But not all bankruptcy is the same — the two most common types, Chapter 7 and Chapter 13, work very differently and are suited to different financial situations. Understanding the distinctions helps you make an informed decision about which path forward fits your circumstances.
Chapter 7 Bankruptcy: The Fresh Start Option for Las Vegas Filers
Chapter 7 bankruptcy — sometimes called “liquidation bankruptcy” — is the fastest and most complete form of debt relief available under federal bankruptcy law. Most unsecured debts (credit cards, medical bills, personal loans, utility arrears) are discharged entirely within 90–120 days of filing. You keep Nevada’s generous exemptions — your home equity up to $605,000 (Nevada homestead exemption), your vehicle, retirement accounts, and household goods — and surrender non-exempt property to the bankruptcy trustee for liquidation.
Chapter 7 is best suited for people with primarily unsecured debt, income at or below the Nevada median (you must pass the “means test”), and no assets they need to protect beyond the exemption amounts. It does not stop foreclosure long-term or help you catch up on mortgage arrears.
Chapter 13 Bankruptcy: The Reorganization Option
Chapter 13 bankruptcy is a 3–5 year repayment plan that allows you to catch up on mortgage arrears (and potentially save your home from foreclosure), pay priority debts like back taxes over time, and discharge remaining unsecured debt at the end of the plan. You keep all of your property — there is no liquidation — but you commit a portion of your disposable income to the plan for the duration.
Chapter 13 is best suited for homeowners facing foreclosure who want to save their home, people with above-median income who don’t qualify for Chapter 7, people with non-exempt assets they want to keep, and those with significant tax debt, car loans, or student loans they need to restructure.
Key Differences at a Glance
Chapter 7 takes 3–4 months and discharges most unsecured debt entirely. Chapter 13 takes 3–5 years but lets you keep all property and cure mortgage default. Chapter 7 requires passing a means test based on Nevada median income. Chapter 13 requires demonstrating sufficient income to fund a repayment plan. Both types of bankruptcy trigger an automatic stay — an immediate halt to all collection calls, wage garnishments, lawsuits, and foreclosure proceedings — from the moment you file.
Nevada Bankruptcy Exemptions
Nevada has some of the most generous bankruptcy exemptions in the country. The homestead exemption protects up to $605,000 in home equity. Retirement accounts are fully protected. Vehicles up to $15,000 in equity. Wages: 75% of disposable earnings (higher than federal minimum). These exemptions mean most Las Vegas filers keep everything they own in a Chapter 7 case.
Frequently Asked Questions
Will bankruptcy ruin my credit permanently? No. Chapter 7 remains on your credit report for 10 years; Chapter 13 for 7 years. Most clients begin rebuilding credit within 12–24 months of filing.
Can I file bankruptcy if I’m self-employed or own a small business? Yes. Self-employed individuals can file Chapter 7 or 13. Business debts are treated differently depending on the business structure.
What debts cannot be discharged? Student loans (with narrow exceptions), recent tax debts, child support and alimony, and debts arising from fraud or intentional wrongdoing generally survive bankruptcy.
Marathon Law Group handles bankruptcy cases in Las Vegas. Call (702) 522-1808 for a free consultation.