Bankruptcy Means Test
Must Qualify for Nevada Bankruptcy
Filing chapter 7 bankruptcy in Nevada means that you must pass the Nevada Bankruptcy Means Test. The means test determines whether your income is low enough for you to file for Chapter 7 bankruptcy. The means test also determines if you are able to make repayments in a Chapter 13 bankruptcy.
Taking the Nevada means test applies to higher income filers in Nevada hoping to file chapter 7 bankruptcy. A means test assures that your income is below the Nevada median for your household size.
This chart shows how an average household income plays into the means test. If your current monthly household income is less than the Nevada median income, you can presume that you would pass the means test and be eligible for Chapter 7 bankruptcy. Pay attention to the number of members in a household.
Average your monthly income over the last six calendar months. This will determine your average household income. It is possible that if you are right now over the median income, but your income has gone down over the last six months, maybe waiting one or two months might bring that average under the median level. For the purposes of the Nevada median income test, when you find your average monthly income, multiply the number by twelve for your annual income.
Passing The Means Test in Nevada
Passing the Nevada means test means that you may file for chapter 7 bankruptcy protection. Therefore, what a means test compares your income with the median income for Nevada. If your current monthly household income is less than the Nevada median income for a household of your size; you should then qualify to file chapter 7 bankruptcy.
Failing the means test would only allow filing chapter 7 bankruptcy under very specialized exceptions. Thus, an alternative with a failed means test would be to file a chapter 13 bankruptcy and repay a portion of your debt to your creditors.
Thus, when taking the means test, if your income is higher than the Nevada median you will need to complete the means test calculation to determine if you can pay back a portion of your unsecured debts through a Chapter 13 bankruptcy.
A Henderson bankruptcy attorney can help you take a means test and advise you as to the best chapter of bankruptcy to file when seeking debt relief in Henderson, Nevada.