Can You File Chapter 7 Bankruptcy If You Have a Job in Las Vegas?
Too many people assume that having a steady job means that filing Chapter 7 bankruptcy in Las Vegas isn’t possible. That’s not the case. Being employed does not determine whether you are eligible on its own. What really matters is whether your income falls within the limits set by federal bankruptcy law.
The Means Test and Your Eligibility
To qualify for Chapter 7 bankruptcy, you have to pass what is known as the means test. This is a formula established by federal law that compares your income to the median income for a household of your size in Nevada.
If your average monthly income over the six months before filing falls at or below the Nevada median, you pass the means test automatically and can proceed with a Chapter 7 filing.
If your income exceeds the Nevada median, the means test does not automatically disqualify you. You will need a second calculation to subtract certain allowable expenses from your income to determine your disposable income. If the result falls below a specific threshold, you may still qualify for Chapter 7.
What Counts as Income for the Means Test?
The means test looks at a wide range of income sources, including wages, salary, tips, commissions, overtime, rental income, pension payments, and even regular contributions from others toward household expenses. However, it does not include Social Security benefits.
Because the test uses a six-month average rather than your current paycheck, your income figure may be lower than you expect if you recently experienced a reduction in hours, a job change, or a period of unemployment.
Nevada Median Income Figures
The US Trustee Program updates the median income figures used in the means test from time to time. Nevada’s median monthly income for a single-person household is approximately $5,300, which translates to roughly $63,600 annually. It’s higher for larger households.
What Chapter 7 Does for Working Filers
For employed individuals who qualify, Chapter 7 can discharge unsecured debts. That includes things like credit card balances, medical bills, and personal loans. It usually takes three to six months from the date of filing to the entry of a discharge order.
Unlike Chapter 13, there is no repayment plan. Once the court grants a discharge, the qualifying debts are eliminated, and you are free to continue working and earning.
Filing for bankruptcy also puts a stop to creditor action. The automatic stay goes into effect the moment you file and halts collection calls, wage garnishments, and most other creditor actions while your case is pending.
What You May Be Required to Give Up
Chapter 7 is a liquidation bankruptcy, which means a court-appointed trustee reviews your assets and may sell non-exempt property to pay creditors. Nevada’s exemption laws protect a significant amount of what most people own, including equity in a primary residence up to $650,000, a vehicle up to $15,000 in equity, household items, retirement accounts, and wages that have not yet been paid.
When Chapter 7 May Not Be the Right Fit
If your income is too high to qualify even after the full means test analysis, or if you have significant assets you want to protect, Chapter 13 may be the better option. Chapter 13 lets you repay debts through a structured plan while keeping property that might otherwise be subject to liquidation.
Contact DeLuca and Associates
Employed and struggling with debt in Las Vegas? Chapter 7 bankruptcy may be the right choice. The attorneys at DeLuca and Associates have helped thousands of Nevada residents evaluate their options and file successfully. Contact us today for a free consultation.
