When your debts feel insurmountable, you may start to consider Chapter 7 bankruptcy as one of your options. Chapter 7 bankruptcy may be the right way to help you get a fresh start and wipe away unsecured debts like credit cards and loans.
To file for Chapter 7 bankruptcy, you must qualify. Whether you are eligible depends on your income. It may also depend on your expenses and your disposable income after you pay your bills. You will likely want to work with an experienced Las Vegas bankruptcy attorney to determine eligibility in your exact circumstances. Learn more about the factors that qualify someone for Chapter 7 here.
Am I Eligible to File for Chapter 7 Bankruptcy in Nevada?
You’re eligible to file for Chapter 7 bankruptcy in Nevada if your income is below the median income in the state for a family of your size. Even if your income is above the median income in the state, you still qualify for Chapter 7 bankruptcy if your disposable income after expenses is so low that you can’t make meaningful payments on your debt. To qualify, you may not have received a Chapter 7 bankruptcy discharge within the last eight years.
Step One – Compare Your Current Income to the Median Income in Nevada
Is your income equal to or below the median income in Nevada? If your income is equal to or below the median income in the state, you meet the first qualification criteria for Chapter 7 bankruptcy. It’s the median income that sets the standard rather than an average or a mean income. In other words, 50 percent of Nevada residents meet this qualification based on their income.
The median income depends on your family size. If you have children, the median income level is higher for the purposes of determining whether you qualify for Chapter 7 bankruptcy. For example, as of this writing, the median income for one person in Nevada is $49,170. If you’re a single person and you make $49,170 per year or less, you meet this qualification. For a couple, the median income threshold is $62,204. For a family of four, the median income is $77,397.
Step Two – Compare Your Income to Your Debts and Determine Your Disposable Income
Even if your income is above the median income in Nevada, it’s still possible to qualify to file Chapter 7 bankruptcy. If your expenses are so high that you can’t make significant payments on your debts, you can still be eligible to file Chapter 7. The question is whether you can pay a substantial amount of your debts during the next five years. If you can, the bankruptcy trustee is going to recommend that you do a Chapter 13 bankruptcy instead of Chapter 7.
To examine your income and allowed expenses, you complete form 122A-2. The form asks you to list certain expenses like your health care, housing and utility costs, vehicle ownership, education, child care, and more. Once you enter all of your information, you complete a calculation to determine whether you qualify. If you have too much disposable income after your expenses, the courts presume that you’re filing for bankruptcy for improper reasons. If you have too little income left after your allowable expenses, you qualify to file for Chapter 7.
Step Three – Have You Had a Previously Discharged Bankruptcy Within the Waiting Period?
You can only file for Chapter 7 once every eight years. If you’ve received a Chapter 7 bankruptcy discharge within the past eight years, you’re ineligible to file again.
You must also wait six years after you file a Chapter 13. If you’ve never filed for bankruptcy before or if you’re past the waiting period, you qualify to file for Chapter 7 bankruptcy as long as you meet the other qualifications.
Step Four – Have You Had a Previously Dismissed Bankruptcy Within 180 Days?
You qualify to file for Chapter 7 bankruptcy if you haven’t had a bankruptcy dismissed within 180 days. The court may dismiss a bankruptcy without discharging debts if you don’t follow a court order or if they think that you’re trying to abuse the bankruptcy system.
Doing certain things, like selling assets to friends and relatives below market value or running up debts for high-ticket items that you know you can’t pay off, are red flags to bankruptcy trustees. If the court dismisses a bankruptcy, you must wait 180 days before trying again.
Special Considerations If You’re a Corporation or an LLC
There are particular things to keep in mind if you’re considering filing for bankruptcy as a corporation or an LLC. If you’re a corporation or LLC, a Chapter 7 bankruptcy doesn’t just wipe out your debts.
Instead, the bankruptcy trustee liquidates your assets to distribute the funds to your creditors. If you’re considering bankruptcy as a corporation or LLC, it’s important to meet with an experienced bankruptcy attorney to ensure that you understand the law and the implications of your decision.
What If I’m Not Eligible for Chapter 7 Bankruptcy?
If you don’t qualify to file for a Chapter 7 bankruptcy, there are still other ways that you can find relief for your debts. You might be eligible for a Chapter 13 filing that can meet your needs. You may also engage in debt settlement negotiations.
If you’re facing insurmountable debts, there are multiple ways to address the problem. Our bankruptcy attorneys can help you understand the pros and cons of each course of action so that you can decide what’s best for you. No matter what your situation, we can help you address your debts, find relief and move forward.
How Can a Nevada Bankruptcy Attorney Help Me Determine My Eligibility to File a Chapter 7 Bankruptcy?
If you’re considering Chapter 7 bankruptcy, it’s essential to determine your qualifications carefully. Our experienced attorneys can help you evaluate your income and expenses. The Chapter 7 means test can be confusing.
You might qualify to file for Chapter 7 bankruptcy and not realize it. Our experienced bankruptcy attorneys have helped thousands of good people just like you explore their options for bankruptcy and get a fresh start. Contact us today for a no-obligation consultation about your case.