Businesses face unforeseen challenges all the time, and one of them may be significant debt. Whether it is due to unexpected costs, declining revenue or personal guarantees on loans, the burden can feel overwhelming. For some, Chapter 7 bankruptcy offers a chance to reset and rebuild.
What is Chapter 7 bankruptcy?
Sometimes called “liquidation bankruptcy,” filing for Chapter 7 bankruptcy does not always mean you will lose everything. It often lets people discharge unsecured debts, such as credit cards, personal loans or business debts, while keeping certain protected property under Nevada law.
What can you keep and what might you lose?
The outcome of a bankruptcy depends on your business type and what assets you have. A key part of Chapter 7 is knowing what you can legally protect. Here are some assets you may be able to keep under Nevada law:
- Your home: Nevada’s generous homestead exemption may protect up to $605,000 in home equity. This means that you could keep your primary residence even after filing for Chapter 7, depending on how much you owe and the value of your home.
- Retirement accounts: 401(k)s, IRAs and other qualified plans usually stay protected, so you can often keep your savings for the future even during bankruptcy.
- Tools of the trade: Equipment, tools or inventory you need for your job may be protected up to a certain value, allowing you to continue working and earning income.
- Household goods: Furniture, appliances and other basic items may be protected within set value limits, so you do not have to give up everyday essentials.
Every bankruptcy case is different, but knowing your rights under Nevada’s exemption laws can help you make informed choices.
Is Chapter 7 the right path for your business?
Filing for Chapter 7 is a serious decision that can have lasting effects. If you are a sole proprietor, it might offer a way to wipe out debt while keeping your business running, especially if your assets qualify for exemption. But for corporations or LLCs, Chapter 7 typically means closing the business and liquidating assets to pay creditors.
Before moving forward, consider how Chapter 7 could impact your credit, your future income and your personal liability. Talking to a bankruptcy attorney can help you weigh the pros and cons and choose a path that supports your long-term goals.
The first step towards relief
If you are struggling with overwhelming debt, Chapter 7 bankruptcy may offer a chance to reset your finances without giving up the assets that matter most. A trusted Nevada bankruptcy attorney can help you understand your options, protect what you have worked hard for, and guide you toward a more stable financial future.