Nevada Debt Relief: Your Guide to State Laws and Managing Debt

Well-known for its tourist destinations of Las Vegas, Reno and Lake Tahoe, Nevada welcomes thousands of visitors every year. But this western state also is home to more than 3 million residents. In recent years, the state has seen a decline in unemployment, with a current rate of 4.2% as of March 2019. For those residents in the workforce, the 2017 median household income was $55,434.

Like many throughout the country, Nevadans are faced with at least some financial debt. Collecting on those debts in Nevada takes a variety of approaches, but there are some programs and assistance options available to help residents pay off their debt, or, if necessary, file for bankruptcy protection.

Reviewing these options and thoroughly studying your financial situation could go a long way in helping you determine how you want to tackle your debt.

• Debt in Nevada: At a glance
• Debt collection in Nevada
• Nevada debt relief programs
• Payday lending laws in Nevada
• Tips to tackle debt in Nevada
• Filing for bankruptcy in Nevada
• The bottom line

Debt in Nevada: At a glance

Unfortunately, many Nevada residents not only have debt, but they also are behind in paying those debts, resulting in debt in collections.

Currently, 41% of Nevadans have debt in collections, according to a 2018 report by the National Consumer Law Center. Of that amount, 25% is medical debt, while just 2% is student loan debt. Breaking those numbers down further, the median amount of debt in collections for Nevadans is $1,760 (any debt); that number drops to $845 for medical debt. However, it rises sharply for student loan debt, with a median amount of $8,244 in collections.

Being pursued by debt collectors can be a stressful experience, but there are some strategies you can use to make the experience as painless as possible. We’ll cover those next.

Debt collection in Nevada

When Nevada residents fail to repay their debts, creditors (those who are owed the money) will reach out through a series of phone calls and letters. However, if those efforts go unanswered, they have a single starting point to enforce collection: the court system. The creditor can file a claim in court for the amount of the debt; which court the case is filed in varies by county. For instance, many small claims courts permit cases for debts up to $10,000. Claims for more than $10,000 could be directed to justice court or district court. Each court operates by its own set of rules.

Regardless of which court hears the case, if the judge rules in favor of the creditor, a judgment will be entered outlining how much money the borrower must pay. The creditor then can use this judgment to utilize several legal tools at its disposal to collect the monies owed. These include garnishing your wages or attaching your personal property; however, there are exemptions to what the creditor can and cannot collect on for the money.

For instance, creditors cannot take funds from income resulting from Social Security payments, public assistance such as food stamps, unemployment benefits, veteran’s benefits, worker’s compensation, child support or alimony payments, or payments from a wrongful death judgment or settlement. In addition, 75% of your disposable income is exempt from collection; if your earnings are $770 per week or less, that number increases to 81%. Also, amounts up to $10,000 in a bank account are exempt from collection.

Creditors also can “attach” the judgment to your personal property, which means they can take the personal property and sell it to collect their money. However, there are exemptions regarding personal property as well. For example, you can retain up to $550,000 in equity in your home if it’s classified as a homestead. If you have less than $15,000 in equity in your vehicle, that, too, will be exempt.

It’s important to note you will have to file a claim for exemption with the court within 10 days of receipt of the notice of garnishment or attachment. That claim must be served on the sheriff or constable for your county, your employer (if your wages are garnished) and the creditor. The court will hold a hearing to determine if the exemption is valid.

Responding to collection letters

In many cases, creditors will hire third-party collection agencies to collect the debt from you. These third-party collection agencies can notify you of their intent to collect the debt by letter and by phone. However, they must follow the Fair Debt Collection Practices Act, or FDCPA, in order to legally collect the debt. This means the collection agency cannot continually harass you or be abusive toward you.

If a collection agency reaches out to you and you do respond to a phone call or letter, you can attempt to resolve the matter with the collector. In the event you do not want to work with the collection agency, you must notify it in writing to stop contacting you. Any contact by the collection agency after it receives this letter is a violation of the FDCPA. Collection agencies also cannot threaten you or call you before 8 a.m. or after 9 p.m.

In addition to the FDCPA, Nevada has implemented its own detailed regulations outlining how a debt collector can go about collecting a debt. For instance, a debt collector must not misrepresent itself or pretend to be someone other than a debt collector in order to collect a debt. Also, they cannot send any correspondence that imitates any official government entity or authority. Specifically, under N.R.S. § 205.322, debt collectors can face criminal charges if their actions make any debtor feel “reasonable apprehension” that he or she will face physical harm or sustain damage to their personal property.

In the event a collection agency reaches out to you for a debt you feel you do not owe, you can dispute the debt and ask the agency to provide written verification of the debt. However, you must do so within 30 days of receiving notice of the debt. The collection agency must then provide written proof that the debt is yours.

Understanding Nevada’s statute of limitations

When it comes to collecting debt, creditors must file a claim in court  within a specific time frame, also known as the statute of limitations. If they do not collect within that time frame, they can no longer sue you to collect on the debt. This means they can no longer get a judgment, and, thus, cannot file a garnishment or attachment on your wages or property. The statute of limitations varies based on the type of debt it is.

The statute of limitations depends on the type of debt, with the primary categories being oral contracts and written contracts. As the name implies, oral contract debts are based on a verbal agreement for you to pay back money borrowed. With written contract debts, you sign paperwork stating you will repay the money borrowed in agreement with specific terms (time length, interest rate, frequency of payments, etc.).

Although you do sign paperwork (credit applications) when applying for credit cards, credit cards are actually categorized as oral contracts since they are open-ended agreements, meaning there’s no set terms for when the loan is due in full.

In Nevada, the statute of limitations for suing to collect oral contract debts is four years and six years for written contracts.

Nevada law states that the clock on the statute of limitations starts on the date of the last transaction, the last item charged or the last credit given. However, if you make a payment on the debt at any time — even if there has been a long time lapse since your last payment — the statute of limitations resets and starts at the time the last payment was made.

One key factor regarding statute of limitations is they only apply to civil suits for a judgment, meaning you can only be sued for the debt within this time frame. It does not mean you are no longer obligated to pay the debt, only that the creditor can not sue you for the debt.

Nevada debt relief programs

To help Nevada residents manage their debt, there are a number of nonprofit and state- and national-based organizations that can provide assistance. For instance, Consumer Credit Counseling Services is a nonprofit organization that offers credit counseling sessions, financial education, budgeting assistance and debt management plans. Credit counseling sessions are free of charge.

Likewise, GreenPath Financial Wellness is another national nonprofit that offers free debt counseling and money management tools (articles, webinars and classes) to consumers. The nonprofit also offers a debt management program that does incur fees. Those fees vary on a number of factors. In addition to online and phone services, GreenPath Financial Wellness maintains an office in Las Vegas.

For Nevada residents experiencing difficulty paying their mortgage, Community Services of Nevada offers financial counseling and discusses alternative options for paying their debt.

You can review a list of Department of Justice-approved credit counseling agencies in Nevada here.

Payday lending laws in Nevada

Payday loans — loans for small amounts with that must be repaid when you receive your next paycheck — can be a short-term solution when money is short. More often than not, though, these loans can lead to quickly rising levels of debt you may not expect.

In Nevada, there are three types of payday loans, all classified as unsecured loans. Deferred deposit loans are traditional payday loans where borrowers obtain a small sum of money that will be paid back when they receive their next paycheck. High-interest loans expand a traditional payday loan by charging 40% or more in interest and, when possible, extending the time for repayment. High-interest installment loans charge between 40% and 199% interest and extend the term length to 150 days or more.

• Maximum loan amount: This depends on your gross monthly income. Lenders are not permitted to write loans that require a payment of more than 25% of the borrower’s gross monthly income.
• Maximum loan term: For deferred deposit loans and high-interest loans, the maximum term is 35 days, although there are conditions where the may be extended to not more than 90 days. There is no time limit for high-interest installment loans.
• Finance charges: No limit, although they must be fully disclosed.

A major problem with payday loans is that, unlike traditional loans, they are not reported to credit bureaus. That means lenders have no knowledge of any other payday loans a borrower may have with other payday lenders. As such, consumers can borrow from more than one lender, essentially digging a very deep hole of debt they may not be able to repay.

Furthermore, because there is no centralized database recording payday loans, it is very difficult for the State of Nevada’s Financial Institutions Division to enforce consumer protections such as time limitations.

The bottom line: Use payday loans as your very last resort. Instead, check out the alternative options in the next section.

Tips to tackle debt in Nevada

When you’re ready to conquer your debt, there are several strategies that can help. These range from consolidating your debt to reduce finance charges to refinancing your home for a lower interest rate, or transferring your credit card balances to a card with a lower (or no) interest rate.

Consolidate your debt

Making payments to a variety of creditors — credit cards, student loans, car payments, etc. — can result in more debt than you may think. After all, you are paying interest as well as principal to each of those creditors. And some of those creditors, especially credit cards, may have variable interest rates that continue to rise over the course of the loan, meaning you will keep paying even more in interest.

By consolidating all of these debts into one personal loan with a lower rate, you could potentially reduce the amount you pay in interest, meaning more of your money will go toward the principal, the key factor in eliminating your debt. Plus, because you are paying less in interest, you can use that extra money for savings. You also may give your credit score a boost by reducing your credit utilization ratio and by making regular, on-time payments.

Of course, debt consolidation is not for everyone. Those with poor money management skills may feel like they have the freedom to start using those credit cards again, resulting in more debt. In addition, debt consolidation may not make sense if you have smaller, manageable debts. You may end up paying more for loan application fees than you would save by eliminating debt with higher interest rates.

Refinance

Because interest rates change frequently, it could be worth your time to look at refinancing your mortgage, auto loan or even student loans.

By lowering your interest rate or refinancing into a longer term mortgage, you could lower your monthly payment, leaving those extra dollars for savings or to pay off other debts.

Refinancing auto loans with lower interest rates could result in big savings, especially if your credit score has improved since you first applied for financing.

If you’re considering a student loan refinance, weigh your options carefully. Refinancing federal loans means swapping them out for a private loan, which won’t come with the same cushy list of flexible repayment options as federal loans. You’ll also now be disqualified from any forgiveness programs.

Use a balance transfer card

If you’re only looking to consolidate credit card debt, consider a balance transfer. That’s when you move one or more credit card debts to a new card that has a low (or no) interest rate. Oftentimes, when consumers sign up for a new credit card, they will receive a promotional annual percentage rate (APR) period with a low or no interest rate. These cards can be ideal for paying off debt with minimal interest.

However, to qualify for these cards — and to receive one with a high limit to accommodate the debt you want to transfer — you will need a very good credit score. In fact, most cards offering promotional 0% APR rates require a minimum credit score of 700. In addition, you must make all payments on time, lest you risk losing that promotional rate.

A balance transfer could be ideal for you if you are diligent about paying it off on time and work to pay down the debt before the promotional APR period ends (usually within 12 to 21 months). That means making more than minimum payments. However, if you don’t pay the balance before the promotional period ends, you could end up paying interest that far exceeds what you had previously on your original cards.

Filing for bankruptcy in Nevada

In the event your debt is much more than you can manage, it may be time to consider filing for bankruptcy. Through bankruptcy, you have the opportunity to eliminate your debt through discharge or by setting up a debt repayment plan.

Most individuals have the choice between two options: Chapter 7, which is known as liquidation bankruptcy, and Chapter 13, which is known as repayment bankruptcy. When filing Chapter 7, you may have to sell some assets to pay off your debts. With Chapter 13, you put together a three- to five-year debt repayment plan that you can manage.

Deciding which chapter is appropriate for you requires an examination of your assets, liabilities and income. To determine which is best for you, it is highly recommended that you speak to a bankruptcy attorney or financial advisor.

To decide if bankruptcy is right for you, consider these Nevada resources:

• United States Bankruptcy Court: District of Nevada
• Legal Aid Center of Southern Nevada
• Bankruptcy Resources from The American Bankruptcy Institute

The bottom line

Managing your debt can be a challenging and, for many, overwhelming process. But it doesn’t have to be. Reviewing your financial situation, researching debt relief programs and taking steps to tackle your debt can help you find light at the end of the financial tunnel.

The information in this article is accurate as of the date of publishing.