Why Your Home’s Value Is Important In a Nevada Bankruptcy

How Can My Home’s Value Impact My Bankruptcy Case?

While Nevada saw some of the highest unemployment rates in the country due to COVID-19, many residents have still observed their home increase significantly in value at the same time. However, this increase in equity may do little to help you if you experienced reduced income during the pandemic. If you’re struggling with debts, bankruptcy could be an effective tool to reduce debts and protect yourself from creditors. However, it’s important to educate yourself about how your home’s value, as well as any appreciated value, could impact your bankruptcy case.

Why Your Home’s Value Is Important In a Nevada Bankruptcy

Nevada Bankruptcy Exemptions

When you file bankruptcy, you will apply exemptions to protect each item of your property. Your home, vehicle, bank accounts, and even your clothes and furniture must fall within your state’s bankruptcy exemptions, or they will be subject to certain consequences, depending on the chapter you file. In a Chapter 7 bankruptcy, non-exempt assets can be seized by the trustee, or the government attorney overseeing your case, and sold to pay your bankruptcy estate. In a Chapter 13 bankruptcy, you must pay at least the non-exempt value of your unprotected assets in your payment plan. When your home is worth more or has more equity than your state’s exemption, this can end up being quite a significant figure to pay in your plan.

In Nevada, the homestead exemption in bankruptcy is $605,000. Nevada doesn’t recognize federal exemptions, so you can only use those specific to our state when you file bankruptcy. The homestead exemption is one of the few bankruptcy exemptions in Nevada that can’t be doubled for married couples filing a joint bankruptcy. Nevada’s $10,000 wildcard exemption can only be used on personal property, and therefore can’t be used on your primary or secondary homes.

Nevada Home Value Calculations

Because you must list all of your property and their values on your bankruptcy petition, it will be your responsibility to calculate an estimated value for your home. Your petition will require that you state the current value, also known as the fair market value, of your home. You will also need to subtract any liens on your home, e.g., a mortgage, a second mortgage, tax liens.

One issue that can arise in bankruptcy home valuation is a difference in opinion between the debtor and trustee. There are many possible methods to calculate your home’s fair market value, and your trustee may believe that a method other than the one you used is the correct one. When there is a disagreement over your home’s value, the trustee’s opinion will win out over yours.

How To Calculate Fair Market Value

There are multiple ways to calculate your homes’ value for bankruptcy purposes. If your home is near the cutoff for the Nevada homestead exemption, you will want to use one of the more detailed methods.

Real Estate Websites

The simplest and cheapest way to estimate your home’s value is by using an internet search. Websites like Realtor, Zillow, and Trulia can all provide you with a rough estimate of your home’s value. If you are fairly certain that your home is protected by Nevada’s homestead exemption, this method should suffice. However, this method has the weakest justification if your trustee disagrees with your valuation of the home.

Market Analysis Of Nevada Real Estate Market

Another option you have is to hire a licensed realtor to conduct a comparable market analysis. The realtor will compare your home with homes in the area that have sold recently to find an approximate market value for your home. Factors like your home’s size, condition, property features, and more can influence the realtor’s analysis. You don’t need to use the quick sale value for your home- use the regular market value under normal circumstances.

Home Appraisal

The most expensive, but most accurate, way to calculate your home’s value is through a full home appraisal. A licensed home appraiser will inspect your home and compare it to recent sales of similar homes in your area to estimate its value. The appraiser will also provide you with a lengthy report explaining the reasoning behind the estimate. You should be sure to hire a home appraiser, as opposed to a property tax appraiser. Property tax valuations can be far different from market values, so there is a higher likelihood of the trustee rejecting this method.

What If My Home Appreciates in Value?

If your home appreciates in value during your bankruptcy, that appreciated value must still be within your state’s exemption, or this can throw a wrench into your case. For example, if your home is worth $150,000, and increases in value to $250,000 during your case, you will still be well within Nevada’s $605,000 homestead exemption, and your case won’t be affected. However, if your home increases in value from $550,000 to $650,000, $45,000 of that appreciation won’t be exempt. If gained while your bankruptcy is active, that amount belongs not to you but your bankruptcy estate.

Such a sharp increase in value may sound like an unrealistic situation to you. However, many people don’t realize just how long bankruptcy cases can last. A Nevada Chapter 7 bankruptcy will typically last at least 4 to 6 months, but can last much longer if there are errors in the petition or the court has a high caseload. A Chapter 13 bankruptcy lasts 3 or 5 years, depending on how the debtor’s household income compares to the median in their state.

Our Bankruptcy Attorney In Las Vegas Can Assist With Your Debt Relief

Has your debt escalated to a situation that is now out of your control? Even if you own your own home, bankruptcy could be the solution to your debt problems. However, it’s still important that you have a general idea of your home’s value, and an understanding of how this will come into play for the chapter of bankruptcy that you file. For assistance navigating these complexities, don’t hesitate to contact our firm for your free consultation with one of our experienced Las Vegas bankruptcy lawyers. Going through this process alone could take longer, put your assets (including your home) at risk, and even cost you more in the long run. Don’t gamble with your finances- leave your bankruptcy in the hands of professionals.

When you’re searching for a bankruptcy attorney, there are probably several features and services that are important to you. Flexible scheduling, a dependable office staff, a secure document portal, etc., could be deciding factors in who to hire. Most of all, a fair price and payment options are vital. That’s why our Vegas bankruptcy lawyers offer affordable fees and payment plans that start as low as $0 down. Get started today by calling or using our online form to schedule your free consultation.

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