Nevada Bankruptcy Means Test

In the 12 month period ending March 2010, almost 30,000 individuals filed bankruptcy in Nevada. Of those, more than 70%, a whopping 21,926 individuals filed for protection under Chapter 7 of the United States Bankruptcy Code. That means that about 1 person in 100 who is living in Nevada and is over the age of 18 filed for bankruptcy in just that single 12 month period.

Chapter 7 Eligibility

The 29,926 people who filed for Chapter 7 bankruptcy in Nevada each had to either have an income lower than the state median income or pass a bankruptcy means test, which has been required by law since the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed. Although one of the purposes of BAPCPA was to funnel more bankruptcy filers into Chapter 13 rather than Chapter 7, it takes just a quick read of the statistics to see that unfortunately almost three times as many people in Nevada are filing for Chapter 7 than Chapter 13.

To determine Chapter 7 eligibility your current monthly income is compared with the median income for your state. As of this writing, the median income figures in Nevada are:

$46,151 for an individual
$60,234 for a two person household
$66,813 for a three person household
$70,851 for a four person household

If you have a household larger than 4 people, add $7,500 per additional individual. These figures can change often, so it is important to consult with a local bankruptcy attorney to check the current figures.

Using your family/household size, if your current monthly income is less than the Nevada median, you qualify to file Chapter 7 bankruptcy. If your income is greater than the Nevada median income, you will move on to the means test to see if you qualify.

The Bankruptcy Means Test

Your bankruptcy attorney will use information that you give him or her about your income and certain fixed monthly expenses to determine if you pass the means test. Even if your income is above the median, if you have qualifying expenses (such as housing, taxes, utilities) you may still be eligible to file Chapter 7 bankruptcy.

The means test will subtract those expenses allowed by law from your income, and then project out over the next five years if you will have more than a total of $10,000 in discretionary funds left over. As long as you have under $10,000 left (or your "non-priority" debt is more than $24,000) you should be able to file Chapter 7 bankruptcy. An example of a non-priority debt is credit card debt.

Get Legal Help

The bankruptcy means test is a way for the courts to be certain that only those debtors without resources to repay debts are filing under Chapter 7; those debtors who don't pass the means test can still file for bankruptcy but they must do so under Chapter 13. Contact a local bankruptcy attorney today if you even think this is something you are considering. They can analyze your personal situation, explain your options under the law and help you decide if bankruptcy is right for you.

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