One of the biggest questions debtors ask when they first consider bankruptcy is, “What property will I be able to keep?” The fear of having to give up their car, their home, or even their retirement account might keep a person from seeking bankruptcy protection. However, in most cases, the property a person owns is protected from seizure. Many states have laws which detail what kind of property, and how much of it, can be declared “exempt” when someone files for bankruptcy.

Nevada has a generous list of exemptions, from covering a person’s house and vehicle to collectibles and firearms. However, each of these exemptions has their own limitation. For example, a debtor might have a piano worth $6,000.00, but NRS §21.090(a) limits the amount of “Private libraries, works of art, musical instruments and jewelry” to $5,000.00. Given that limitation, that debtor might be forced to give up their piano to the bankruptcy trustee, who would then sell the instrument in order to pay the creditors.

However, the debtor might not need to give up their piano. Nevada has what is known as a “wildcard” exemption (NRS §21.090(z)) that states: “Any personal property not otherwise exempt from execution … including, without limitation, the judgment debtor’s equity in any property, money, stocks, bonds or other funds on deposit with a financial institution, not to exceed $10,000 in total value, to be selected by the judgment debtor.” Since the piano is less than $10,000, the debtor can declare their piano as their wildcard exemption and keep it.

The wildcard exemption can also be stacked on top of other exemptions. For example, let’s say the debtor has both the $6,000.00 piano and a watch valued at $5,500.00. Since both fall into the same category of NRS §21.090(a), and exceed that exemption’s $5,000.00 limitation, the debtor wouldn’t be able to keep them with that exemption alone. However, the wildcard exemption can be stacked on top of the original exemption, bringing the exemption’s new total to $15,000.00 and allowing the debtor to keep both items.

The wildcard exemption can also be divided and stacked. Let’s say a debtor has both the same $6,000.00 piano and the furniture in their house is valued at $13,000.00. NRS §21.090(b) sets the limit of “Necessary household goods, furnishings, electronics, wearing apparel, other personal effects and yard equipment” to $12,000.00. Without the wildcard exemption, the debtor would have to give up both their furniture and their piano. But with it, the debtor can deduct $2,000.00 from their wildcard exemption and apply $1,000.00 to both their piano and furniture exemption, saving both items from seizure.

The wildcard exemption is the only exemption that can be used to cover other items. If we take that same $6,000.00 piano, and that same debtor has only $10,000.00 worth of furniture, they can’t use the extra $2,000.00 from the furniture exemption to cover their piano. They’d have to use the wildcard exemption.

Exemptions can also double if someone files a joint bankruptcy with their spouse. If a married couple had that same $6,000.00 piano, their exemption under NRS §21.090(a) would be $10,000.00 instead of $5,000.00, which would allow them to keep their piano without having to use any of their wildcard exemptions. Only certain exemptions double for a joint bankruptcy, though. The exemption amount for a house or homestead remains the same, as does the amount in a pension or stock bonus plan.

If you think bankruptcy might be right for you, contact the legal experts at Luh and Associates for a free consultation.