Although most people who file bankruptcy in Las Vegas choose to file in Chapter 7 because their debts are mainly unsecured consumer debts like credit cards, many choose to file in Chapter 13. Sometimes this is by choice and sometimes it’s necessity. For instance, many debtors’ incomes are above the median for Nevada, causing them to fail the Chapter 7 means test. However, not everyone who wants to file in Chapter 13 will be able to do so. The Bankruptcy Code lists the (in)eligibility criteria in 11 USC § 109:
- Debtors must have a “regular income.”
- Debtors must be individuals, even if they are self-employed, so partnerships or corporations of any type are prohibited from filing in Chapter 13.
- Debtors who owe more than $360,475 in unsecured debts or $1,081,400 in secured debts are ineligible for Chapter 13. Those with debts in excess of this amount will have to file in Chapter 7 (if available) or Chapter 11.
- A debtor who filed a bankruptcy case in the previous 180 days and willfully failed to abide by the bankruptcy court’s orders or failed to appear “in proper prosecution of the case” may not file in Chapter 13. If there is a request for relief from the automatic stay and the debtor files and obtains a voluntary dismissal of the case, then the debtor cannot file in Chapter 13. It might be possible for the debtor to reopen the previous case, however.
- Debtors who fail to complete the required credit counseling course and timely submit proof that they did so within the previous 180 days. This requirement can be waived if the bankruptcy trustee determines that there are no reasonably adequate providers of credit counseling in the district.
Of these the most likely reason debtors might not meet all the requirements is the fourth, failing to complete the credit counseling requirement. Obviously, debtors who do not have a “regular income” will have the option of filing in Chapter 7 as they will certainly pass the means test. Otherwise, most debtors will not have hundreds of thousands of dollars in debts (secured or not), and most have enough sense to show up to the 341 meeting of the creditors when it’s scheduled. Consequently, most people will encounter no difficulties filing in Chapter 13.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.