If you are struggling, financially and feel like you can’t dig yourself out of the hole, bankruptcy may be an option that can help. The Nevada Bankruptcy Means Test allows individuals to see if they are eligible to file either a Chapter 7 or Chapter 13 bankruptcy.
A Chapter 7 bankruptcy allows you to have a fresh start or clean slate, but it’s important to consult with an attorney before filing. Both Chapter 7 and Chapter 13 bankruptcy can help you take control of your finances and rebuild.
The Bankruptcy Means Test Calculator in Nevada helps you estimate whether you qualify for Chapter 7 bankruptcy. The first part of the means test is based on your income relative to those in Nevada and household size. The second part deals with your expenses.
When filing for bankruptcy in Nevada, you may have to take the bankruptcy means test.
For Chapter 7, the means test determines whether or not you are eligible to apply. If you make over a certain amount, determined by Nevada, you may not be allowed to file for Chapter 7 bankruptcy. The test will look at your current monthly income and it may not be higher than the state median income.
With Chapter 13 bankruptcy, the means test determines if you have enough monthly disposable income to make repayments each month to your unsecured creditors. It also can help determine if you are eligible for a 3-year or 5-year plan. With Chapter 13, there is not a maximum amount that you can make.
The means test in Nevada looks at a few things. First, it considers what your monthly income is, and some incomes may be protected. We will cover that later. Next, your monthly expenses are considered. The test looks at your cost of living expenses, and other required monthly payments. Finally, the means test looks at the amount of debt an individual has. Considering all these things, the means test determines whether or not a person can make monthly payments into a repayment plan, should they be approved for bankruptcy.
If you live in Nevada and are planning on filing for Chapter 7 or 13 bankruptcy, be sure to continue reading to see exactly what to expect when completing your means test.
If you are unsure as to whether or not you may qualify for a Chapter 7 or 13 bankruptcy, feel free to take our free bankruptcy means test calculator. The calculator was designed with you in mind and is based on the bankruptcy means test forms in Nevada! We want to make sure you understand your eligibility, along with the other options that may be available to you based on your specific situation.
Once you take this test, you can see what forms of bankruptcy you may be eligible for, and compare what may be the best option for you.
The bankruptcy means test income limits in Nevada are updated every 6 months or so. The current numbers below are for cases filed on or after April 1, 2024 (source). If you have a household size that is bigger than the maximum number below, you would just add $9,900 for each additional household member.
As mentioned earlier, the means test is a document you will fill out at the beginning of your bankruptcy filing process that will determine your eligibility and repayment plan for bankruptcy. To fill out this form, you will need to report a few things. The first is your income. Here are some things to keep in mind when reporting your income on your Nevada bankruptcy means test document:
To be able to file for Chapter 13 bankruptcy, there are a few income limits an individual has to meet. First, the individual has to have less than $465,275 of unsecured debt. This is a part of the Chapter 13 debt limit. Unsecured debt is any form of debt that is not backed by an asset that can be held as collateral. This means that, if you were unable to repay your unsecured debt, there wouldn’t be anything that the creditor could repossess to recoup the lost payments. Unsecured debt includes things such as credit card debt, medical bills, utility bills, and more.
Next, an individual cannot have over $1,395,875 in secured debt. Secured debt is debt that is backed by collateral. This can include things like home mortgages, car loans, and other loans where something can be repossessed to recoup the cost of nonpayment.
Debt limits are not the only requirements that have to be met when filing for Chapter 13 bankruptcy. There are other requirements, such as:
If you meet these requirements, the court may approve your case. That said, you may consider the pros and cons as well. For example, your credit score and report may be negatively affected.
The means test itself does not change from state to state. However, the test compares your average monthly income to that of the state’s household average monthly income. Because of this, where you live will change what average income your income will be compared to.
For example, the means test income levels would not differ between Las Vegas and Henderson, but that income limit may differ between Nevada and California.
If you filed for bankruptcy in the past and are looking to file again, be sure that the appropriate amount of time has passed. Before you file another chapter of bankruptcy, you may have to wait a few years. Check out the timeframe below:
Chapter Filed Earlier, Chapter to be Filed, Time Restriction
If you fail the means test for bankruptcy, it simply means that you are not eligible for that specific type of bankruptcy. With Chapter 13, failing the means test means you do not have enough disposable income to make a payment at the end of each month to the bankruptcy trustee. Because of this, the court cannot grant you a Chapter 13 bankruptcy, which may require sizable monthly payments.
Chapter 7 bankruptcy may be an option depending on your income. Chapter 7 is the cheapest and fastest option with attorney fees ranging from $1,000-$2,500 and it takes 3-4 months. It is liquidation bankruptcy so it will try to liquidate your high-valued assets, being your house and car, before it wipes away the debt. However, the assets may be protected depending on the equity, having a current car loan, and the state exemptions. It will be on your report for 10 years. You do have to qualify for Chapter 7 and it's based on household gross income before taxes. It gives full legal protection.
If you fail the means test for Chapter 7 bankruptcy, then that means you make too much compared to the requirements. To pass a Chapter 7 means test, your income has to be below the median income for the household in that state, so it may be difficult to qualify. Regardless of why you failed the means test, you have some other options.
Debt settlement works in a variety of ways. Either you or a company on your behalf negotiates with your creditors until they agree to a lower debt balance that you can then pay off, leaving a portion of your debt forgiven. An example of this may look like the following: Say you owe $30,000 in debt. You may approach your creditor and negotiate the amount down to $15,000. Often, especially if you are working with a debt settlement company, you will have created an account that holds a sum of money that you are willing to pay immediately. If the creditors agree, then you will have $15,000 of forgiven debt once the remaining sum is paid off.
There are some potential negatives of this option, namely that you tend to have to miss a few payments for your creditors to be willing to negotiate. Not only does this put you at risk of being sued by the creditor, but it also impacts your credit score for up to seven years.
Additionally, there is no legal protection so if a creditor does not agree to a negotiated payment plan, they may sue you. If a creditor sues you then that may go on your credit report.
There are also potential taxes on the forgiven debt. Whatever debt was forgiven in the settlement may be taxable and you have to report the canceled debt on your tax return for the year it was canceled. Generally, you may have to report any taxable amount of canceled debt as income. The creditor may send you a 1099-C form you would have to fill out.
You could also look into considering a debt management program. Debt management programs are also known as credit counseling. When you are working with a debt management company, you will have to report your entire financial situation to the entity. They will then devise a plan that best helps you get out of debt as efficiently as possible. They are also able to help negotiate lower interest rates on any loans or other lines of debt you may already have. This can take anywhere from 36-60 months.
The pro of this is that it may allow you to pay into the principal rather than the increasing interest. So, if you have credit cards with high-interest rates and want a less aggressive option, this may be something to look into.
The downside to this option is that you still have to pay off everything you owe, so it may be a more expensive option. The good news is that it won’t hurt your credit as much as some of the other options may. However, the accounts included in the program will close which may take a small hit to your credit.
Overall, the means test is just a way to see what forms of debt relief you may qualify for. Using the bankruptcy means test calculator for Nevada can help you better understand your financial situation and whether or not bankruptcy is right for you. If you have any questions or want to talk more in-depth, reach out to a local attorney and set up a free consultation!
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