Northern Nevadans are filing for bankruptcy in record numbers...ever since President Bush signed a new law last Wednesday.
The new law goes into effect in six months, with the exception of the homestead exemption, which changed as soon as the President signed the bill.
One local expert says the Reno area really felt the change, because of our recent housing growth.
Northern Nevadans were the first to feel the brunt of the new law.
People declaring bankruptcy...could now shield up to two hundred thousand dollars of their home's value from creditors.
Under the new law, the state's homestead exemption dropped to a hundred and twenty-five thousand dollars...for those who owned their home fewer than four years.
Steve Harris, Bankruptcy Attorney "you had filers out there who lived in their homes less than 42 months but had more than 125-thousand dollars in equity so they wanted to beat the filing deadline"
Bankruptcy attorneys say the rise in home prices...was also a reason for people beating the deadline.
The average cost of a home in Northern Nevada is nearly 300-thousand dollars...compared to the national average of 191-thousand dollars.
Harris, "something we never fathomed would take place three years ago. People racing to the courthouse to take advantage of the old laws."
Those who wanted to file bankruptcy and didn't want to take advantage of the homestead exemption have until October before the new law takes place.
People making less than 58-thousand dollars, the median income in Nevada, could still file for chapter seven.
Anything over 58-thousand dollars, the debtor would most likely have to file for chapter 13.
Harris, "over 58-thousand requires means testing to decide whether chapter seven which is a straight bankruptcy or chapter 13 which is a wage earner program. You have to repay your creditors over five years."
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