Solar Panels And Bankruptcy In Las Vegas, Nevada

When an area is fairly consistently sunny and cloudless, residents can take advantage by using solar panels to harvest power from the sun. But despite how much savings this may yield, there are other financial challenges presented to those living in Nevada, like a job market that isn’t as strong when tourism declines. There are multiple ways a Las Vegas resident can pay to install a solar panel to power their home. This can affect what will happen to their solar panels if that person ever files for chapter 7 or chapter 13 bankruptcy. Are you concerned about how your solar panels will come into play in a potential Las Vegas bankruptcy case? Read on for more discussion on this topic. To schedule your free consultation with an experienced Nevada bankruptcy lawyer, call 702-370-0155. 

Solar Panel Leases

A solar panel can be acquired through a lease, sometimes called a power purchase agreement or PPA. Here, the person is only renting their solar panel as opposed to owning it. This can make it a more complex issue to handle should that person ever file for bankruptcy. But it is also important to consider whether the debtor wants to keep their solar panels, or if they would rather get rid of them. They may have been a solid investment not worth losing to bankruptcy, or the homeowner may find that they aren’t seeing enough return to make continuing the lease a wise decision. A bankruptcy debtor will typically have both options- continue with the lease or cancel it- through bankruptcy. This goes for both chapter 7 and chapter 13 bankruptcy debtors. Chapter 7 is a liquidation bankruptcy which clears debts, and chapter 13 is a debt reorganization which pays off debts in a payment plan. Some debtors will qualify for both, others for just one or the other, and unfortunately, some people will not qualify for bankruptcy at all. 

If a debtor files for chapter 7 bankruptcy, they may be required to formally reassume their contract to keep the solar panels. This will typically require that they catch up to current if they have any balance in arrears. Otherwise, they will keep paying their monthly bill and the contract will continue as normal. But if the solar panels aren’t saving the homeowner more than they cost each month, or they plan to move soon, it may be more advantageous to take advantage of bankruptcy’s opportunity to surrender leases. Surrendering a lease means the contract is fully terminated. Here, any past-due balances and other fees will be wiped out by the bankruptcy. The solar panel company has the right to come to the property and take back the solar panels if their lease is surrendered. However, this isn’t always a cost-effective decision for the solar panel company. This could cost thousands of dollars just to retrieve equipment which might be damaged and unusable anyway. The solar panel company may just leave the solar panel on the roof for the homeowner to deal with personally. And, it will be disabled and no longer provide power. This could end up becoming a huge hassle for the owner if they ever go to move or sell the home. 

Financed Solar Panels

Some homeowners would rather have the security of knowing they own their solar panels. If they purchase their solar panels with loans, those become secured debts. Some of the most popular solar panel financing companies are Sunlight Financial, GoodLeap, and Mosaic. These companies will typically make sure to file to attach a lien to the fixture. In some instances, the home itself, as opposed to just the solar panel, can serve as collateral for the loan. This puts the homeowner’s residence at risk if they fall behind on payments for their solar panels. This also reduces the owner’s options should they ever file for bankruptcy. Secured debts are more complicated to deal with in both chapters of bankruptcy than unsecured debts. 

Chapter 7 bankruptcy can only clear unsecured debts. It does not clear secured debts, or loans with assets attached as collateral. If a debtor files for chapter 7 bankruptcy with liens on their solar panels, they will have to surrender the solar panels to clear the debt. But the owner will need to work out some other agreement if the lien is attached to their home, which they likely won’t want to surrender to pay a debt stemming from a solar panel. The solar panel company may allow the debtor to keep making their payments and keep their solar panels. But the solar panel company may also require the debtor to complete a reaffirmation agreement to keep their solar panels. This is simply a contract in which the debtor agrees to continue paying the loan as originally agreed upon despite filing for bankruptcy. This won’t be necessary in chapter 13 bankruptcy unless the debtor is able to cram down their solar panel payments. This is possible if they owe more on the solar panels than what they are worth. This could be a massive savings, but the debtor should calculate their financial situation as a whole with a bankruptcy attorney before deciding which chapter to file. 

Solar Panels Owned Outright

When a homeowner pays off their solar panel loan, or pays the full price up front in cash, they will own it outright. But if the homeowner later ends up in financial trouble, they may need bankruptcy as a form of debt relief. Assets must be protected by exemptions in bankruptcy, or there will be case-altering repercussions. If the owner installed the solar panels into their home as a permanent fixture, they can argue that the homestead exemption should apply. Nevada’s homestead exemption currently protects $605,000 equity in a bankruptcy debtor’s primary residence. But if the solar panel installation brought their equity over that amount, they can try to protect the solar panels with other household bankruptcy exemptions. Nevada requires that debtors record a declaration of homestead with the county recorder to protect their homes in bankruptcy. Discuss your situation with a bankruptcy attorney to make sure you are fully qualified for your chosen chapter and to use the homestead exemption in a Las Vegas bankruptcy filing. For your free consultation with the Law Office of Erik Severino, call 702-370-0155. 

Make Sure Your Financial Future Will Be Bright with Our Las Vegas Bankruptcy Team

There are benefits to filing for bankruptcy that can be infinitely useful to someone who is in over their head with debt. But it is also a complicated process, and mistakes along the way can come with serious consequences. How a homeowner pays for their solar panels can be just one of the issues that complicates a chapter 7 or chapter 13 bankruptcy filing in Las Vegas. But starting the process can be intimidating, especially when a debtor assumes that they can’t afford high-quality legal representation due to their circumstances. Our Las Vegas bankruptcy lawyers team attempts to remove the cost barrier to retaining bankruptcy counsel by offering flexible post-filing payment plan options. Learn more and see if you qualify today with your free consultation by phone at 702-370-0155.