When Is Bankruptcy in Nevada Not a Good Idea?
Bankruptcy is a major decision that is usually reached after someone has struggled financially for an extended period of time. It can be tempting to file bankruptcy just because you are struggling with debt, but there may be reasons why it is a bad option for your family’s situation. Before deciding to file in Nevada, you should consult with an experienced lawyer to discuss the best option for you.
In Which Cases You Should Not File Bankruptcy?
When you're dealing with insurmountable debt, bankruptcy can offer you robust protections under Nevada law. Unfortunately, it just isn’t a suitable option for every circumstance. There are several situations where you should not file, as it may do more bad than good.
For example, you can’t use it to wipe out Nevada child support and alimony payments, and it usually won’t help with student loan payments. While you might have the option to discharge your student loans if you can show it would cause you "undue hardship” to repay them, this is a nearly impossible standard that very few people are able to meet.
Bankruptcy can also be a bad choice for dealing with some secured debts, as it doesn’t eliminate the liens that lenders have on your property. While discharging debts relieves you of the obligation to pay them, if a debt is secured with collateral, the creditor can still recover it after your case is over.
When most of your debts can’t be discharged, it is usually a bad option for solving your money woes. In most cases in Nevada, the negative consequences of filing are substantially outweighed by the positive impact. However, when filing doesn’t help your financial situation, the adverse effects just aren’t worth it.
Why Can It Be Bad For You?
When bankruptcy can help eliminate your debts, it is worth the initial hit your credit score will take after filing. However, if you file in a situation where your financial problems stem from nondischargeable debts, the impact on your credit can be devastating, making it a bad option.
A Nevada Chapter 7 filing will remain on your credit report for 10 years from the date you file your petition with the court, and a Chapter 13 case will stay on for 7 years. While the effect on your score will be reduced over time, if you still can’t afford to pay back your nondischargeable debts after your case is closed, the damage to your credit score will likely outweigh any benefits. A bad credit score can also prevent you from securing financing.
How To Decide If Bankruptcy Is Right for You
There is no doubt that many people have turned to bankruptcy as a way out of impossible debt, but there are times when this may be a bad decision. To determine whether it’s the right option for handling your financial problems, you need to review your debt situation with a knowledgeable Nevada attorney.
DebtStoppers offers prospective clients a free debt analysis session with one of our skilled lawyers. During this meeting, we will review your monetary situation and discuss the best option for meeting your needs and financial goals.