Qualifying for Bankruptcy is not as difficult as it may seem. In Nevada, there are several different Chapter of bankruptcy that may be filed. Plus, when debts become too much to handle on your own, bankruptcy is there to give you a financial clean slate. Most people considering bankruptcy choose between two options: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Whereas, Chapter 7 simply liquidates and discharges most unsecured debts, while debts are reorganized into a payment plan in a Las Vegas Chapter 13 Bankruptcy. For that reason, many filers would prefer to file a Chapter 7 Bankruptcy in Las Vegas. However, there are strict restrictions on who can file a Chapter 7.
Qualifying for Chapter 7 Bankruptcy
In Nevada, there are two ways to qualify for a Chapter 7 bankruptcy. The first is by making less than the state median income based on how many family members you have. Only spouses and minor children will be included as your family members. The median income in Nevada starts at $52,449 for a single filer with no dependents. It increases to $65,756 for an additional family member, $74,856 for a third, and so on.
The Bankruptcy Means Test
If you make more than the state median, you have a second chance to qualify for Chapter 7. This is called the Means Test. The Means Test is used to determine if you have enough disposable monthly income to pay on your debts. Necessary expenses like student loan and tax debt payments will be factored into your income averaged over the past six months. There will be an amount based on your family size that creates a presumption of fraud. If you have less than this amount after the calculations, you will still qualify for a Chapter 7 bankruptcy.
If You Don’t Qualify for Chapter 7, You May Qualify for Chapter 13
When your income is too high to qualify for a Chapter 7, you will likely qualify for a Chapter 13. This chapter is often referred to as a wage earner’s bankruptcy because you need to be able to show that you will reasonably be able to make consistent payments on at least a minimal amount of your debts. There are also ceilings on how much debts you can have. You can file bankruptcy if you have less than $419,275 in unsecured debts, and $1,257,850 of secured debts.