Las Vegas Chapter 7 Bankruptcy and the “Means Test”

As you may already know, Chapter 7 is the typical kind of bankruptcy filing that most Las Vegas residents think of when they think about bankruptcy.  It means any unprotected assets are sold off to pay creditors and your debt is wiped clean, often all within several months.

The 2005 bankruptcy law, however, included something called the “means test” which makes it a little more difficult to file for Chapter 7 bankruptcy.  The goal of the means test is to make sure that people who can afford to pay their creditors back through a Chapter 13 bankruptcy (essentially a repayment plan over 3 to 5 years) do so.  So the means test consists of a series of calculations.  If you don’t have enough income for a Chapter 13 case, then you “pass” the means test and are eligible to file for Chapter 7.  If you do have enough income, then you “fail” the means test and have to use Chapter 13.

As with your taxes, applying the means test involves more than just doing straight calculations.   It’s important to know which items to count, how much to value them, and how to categorize them.  These decisions can make all the difference between passing and failing the means test.  And an experienced Las Vegas bankruptcy attorney will know how to properly prepare you so as to optimize your outcome.

Chapter 13 vs. Chapter 7

There are situations where Chapter 13 is a better option than Chapter 7.  For example, it can help you to save your home from foreclosure in some cases where Chapter 7 cannot.

However, by and large, most people prefer to file for Chapter 7 bankruptcy because everything is more straightforward and the case is typically completed in a matter of months rather than years.

Please feel free to contact an experienced Haines & Krieger Bankruptcy attorney at 702-880-5554 for a free initial consultation if you have questions about Chapter 7 bankruptcy and/or Chapter 13 bankruptcy.  A good Las Vegas bankruptcy attorney will help walk you through the process and get back on your financial feet.

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