The Bankruptcy Means Test
What is a Bankruptcy Means Test? How Does it Help Me?
The bankruptcy means test is a tool in bankruptcy that determines if you can file for Chapter 7 bankruptcy or if you might have to seek Chapter 13 as a means of debt relief. The determining “Test” is called a “Means Test”. This let’s our Nevada bankruptcy staff know who can file for debt forgiveness through Chapter 7 bankruptcy.
How Does the Means Test Work?
The Means Test takes into account your income, expenses and family size to determine whether you have enough disposable income to repay your debts. Although, the means test was originally designed to restrict the number of debtors who can get their debts forgiven through a Chapter 7 bankruptcy. most people who take the means test pass it easily.
Those who don’t qualify for Chapter 7 or who want to retain certain assets such as; (house, RV, boat, expensive car, etc…) can choose instead to restructure their debts and pay them off through Chapter 13 bankruptcy.
Nevada “Median Income” Test
Las Vegas Bankruptcy Means Test Lawyer
If your monthly household income is less than the Nevada median income for a household of your size, you are presumed to be eligible to file for Chapter 7 bankruptcy under Section 707(b)(2).
Compare your household income over the past six calendar months to the state median.
|
Median Household Income Test for NevadaCompare your household income to the Nevada median income. Form B122A-1 requires you to total up your income for the last six calendar months, average it, then annualize it, and then compare it to the Nevada median for your size household. If your income is below this amount, you meet the requirements of the “means test” (section 707(b)(2) of the bankruptcy code) to qualify for Chapter 7 bankruptcy. The chart below makes it a bit easier to figure out. Compare your six-month total income over the last six calendar months to the “6 Mo. Total” in the chart below to get a rough idea of in which side of the line you fall. Note the rules for household size (column HH) that apply.
|
|||||||||||||||||||||||||||||||||||||||||||||
If LESS < |
Nevada Median Income Test
|
> If MORE |
||||||||||||||||||||||||||||||||||||||||||||
| You Pass!
Chapter 7 is an option. Not legally required to complete Form B122A-2, but may want to anyway.* |
|
Keep Going!
You must complete Form B122A-2 to determine if Chapter 7 is available. |
||||||||||||||||||||||||||||||||||||||||||||
| Sources: U.S. Trustee Program, Department of Justice, 11 U.S.C. Sec. 707(b)(7) exclusion. Official Form B122A-1, Line 13 |
||||||||||||||||||||||||||||||||||||||||||||||
|
Source: U.S. Trustee, U.S. Department of Justice (for bankruptcy cases filed on or after May 1, 2018) |
||||||||||||||||||||||||||||||||||||||||||||||
(*The applicable household size is the number that would currently be allowed as exemptions on your federal income tax return, plus the number of any additional dependents whom you support.)
*source: “Bankruptcy Means Test Calculator for Las Vegas, Nevada (Clark County) Renauer, Albin. Legal Consumer. 2018.Web. 27 June 2018.
Clients who call upon our Nevada Debt Relief Services have overwhelming financial problems caused by life circumstances. Additionally, our bankruptcy lawyers understand that residents in Las Vegas, Henderson, Paradise, and throughout Nevada residents are faced with trying times that result in debt. Therefore, please know that we are here to help you get out of debt. We are a debt relief agency that help people file for bankruptcy.
