Declaring bankruptcy can feel overwhelming, and one of the biggest concerns people have is whether they’ll lose their most important assets — particularly their home and car. The good news is that, in many cases, it’s possible to keep these essential assets while still obtaining relief from overwhelming debts.
Understanding how bankruptcy laws protect your property and how exemptions work is key to making informed decisions during this challenging time.
How Bankruptcy Works
When you file for bankruptcy, your assets become part of the bankruptcy estate. A bankruptcy trustee may review these assets to determine if any can be sold to pay creditors. However, the law provides protections, called exemptions, that allow you to retain certain property necessary for everyday life and financial recovery.
The ability to keep your home or car often depends on several factors:
- The type of bankruptcy you file (Chapter 7 or Chapter 13)
- The equity you have in the asset
- The state exemptions available
Let’s explore how this works in practice.
Keeping Your Home in Bankruptcy
Your home is usually the most valuable asset, so it’s natural to worry about losing it in bankruptcy. Fortunately, most states, including Nevada, have homestead exemptions that protect a significant portion of your home’s equity.
Chapter 7 Bankruptcy:
- Chapter 7 is a liquidation bankruptcy where non-exempt assets may be sold to pay creditors.
- Nevada’s homestead exemption allows you to protect up to $605,000 in equity (as of 2025) for your primary residence.
- If your home equity falls under this limit, the trustee cannot force a sale, and you can keep your home.
Chapter 13 Bankruptcy:
- Chapter 13 involves a repayment plan, usually lasting three to five years.
- In most cases, you can keep your home and make payments through your plan, provided you continue paying any mortgage arrears and maintain current mortgage payments.
Important Consideration:
To maximize protection, make sure your home is your primary residence and that you file a homestead declaration if required. Also, keep up with your mortgage payments — bankruptcy doesn’t eliminate secured debts like a home loan unless explicitly addressed in your case.
Keeping Your Car in Bankruptcy
Your vehicle is essential for work, school, and daily life. Like homes, cars can often be protected using state vehicle exemptions.
Chapter 7 Bankruptcy:
- Nevada allows you to protect up to $15,000 in equity for one vehicle.
- Equity is calculated as the car’s current market value minus any outstanding loan balance.
- If your car’s equity is under the exemption limit, the trustee generally cannot take it.
Chapter 13 Bankruptcy:
- With a Chapter 13 repayment plan, you usually keep your car while making plan payments.
- You may need to catch up on any past-due loan amounts through the plan to avoid repossession.
Other Considerations:
- If you have more than one car, only the first is fully protected up to the exemption limit.
- For disabled individuals, additional exemptions may apply to protect vehicles.
Other Assets to Consider
Besides your home and car, bankruptcy exemptions also protect other essential property:
- Household goods and furniture
- Clothing
- Tools of your trade or professional equipment
- Retirement accounts (IRAs, 401(k)s, pensions)
- Public benefits like Social Security, unemployment, or disability
These protections ensure that while you address your debts, you maintain a basic standard of living and the tools needed for work and independence.
How to Maximize Your Protection
- Consult a bankruptcy attorney — Understanding your state’s exemptions and how they apply to your specific situation is crucial.
- Evaluate your equity carefully — Knowing how much equity you have in your home or car will determine whether you’re fully protected.
- Maintain secured debt payments — Secured debts like mortgages and car loans generally need to be paid to keep the asset.
- Consider Chapter 13 if necessary — If your home or car has more equity than exemptions allow, Chapter 13 may help you keep the property while repaying creditors over time.
Final Thoughts
The fear of losing your home or car is one of the biggest reasons people hesitate to file for bankruptcy. The good news is that, with Nevada’s generous exemption laws and careful planning, many people can keep these essential assets while obtaining debt relief.
If you’re considering bankruptcy and want to understand how to protect your home, car, and other valuable property, the experienced team at DeLuca & Associates Bankruptcy Law can guide you through every step. They help you make informed decisions to safeguard your assets and achieve a fresh financial start.