Q:  In Nevada, must a Declaration of Homestead be filed before the bankruptcy case is filed in order to exempt any equity in my primary residence? 

A:   Yes, in general.  According to most authorities, the Declaration of Homestead must be filed with the appropriate county recorder's office prior to filing for bankruptcy.  Therefore, the safest course of action is to properly file the Declaration before filing bankruptcy.  

Section 115.020 of the Nevada Revised Statutes details the requirements for filing the Declaration.  The Declaration can only be recorded against the debtor's primary residence (where the debtor actually resides).

In limited circumstances, courts including the United States Supreme Court in Myers vs. Matley, 318 U.S. 622, 63 S.Ct. 780, 87 L.Ed. 1043 (1943) and the Bankruptcy Appellate Panel of the Ninth Circuit in In re Gitts, 116 B.R. 174 (9th Cir. BAP 1990) have held that debtors in Nevada may exempt their homestead in a bankruptcy case even though the homestead declaration was recorded after the bankruptcy filing.   The decisions rely specifically on Nevada law which recognizes the filing of a homestead exemption up to the point of the execution sale.   Therefore, so long as the bankruptcy case is filed prior to the execution or trustee's sale, case law permits debtors to file the homestead declaration after the bankruptcy filing but before the trustee sale is conducted. 

Again, the best way to protect your homestead is to properly file the Declaration prior to filing for bankruptcy.  It is also highly recommended that all debtors claim the maximum applicable exemption even if equity in the debtors' primary residence is minimal or does not exist at the time of filing.  Chapter 7 bankruptcy trustees have been successful claiming an interest in equity accumulated during the pendency of a bankruptcy case.  For this reason, it is always the best policy to limit how long a chapter 7 case is open.  No Asset Cases are generally closed within four months of a bankruptcy filing.  Asset Cases remain open as long as it takes the assigned bankruptcy trustee to administer all estate assets and to make distributions to creditors.  Cooperation from the debtor will generally expedite the closing of an Asset Case.  Many Asset Cases remain open for approximately one year, however, other Asset Cases may remain open for years.  

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