Earlier this month, the United States Trustee’s Office released the updated median income numbers for households in Nevada. Unfortunately, unless there are seven (7) or more people in your household then the median income for your household to qualify for Chapter 7 without a ‘presumption of abuse’ just went down, in the case of a three (3) person household – very substantially.
This should comes as no surprise with Nevada having a high level of unemployment, hours being cut for some people, and new hires earning a lower hourly wage.
When a person or couple files bankruptcy, the type (or ‘Chapter’) of bankruptcy depends, in large part, on the person’s or couple’s average gross income over the six months ending the month prior to the date of filing and whether the person or couple has the ‘means’ to pay part of their debts in a Chapter 13 using a test called, appropriately, the ‘means test’ which came into being with the 2005 major revisions to the Bankruptcy Code. This average income number is then compared against the median income for a household equal to the household size of the person or couple filing bankruptcy. If the person or couple’s income is greater than the median income, then the person or couple’s bankruptcy attorney must complete the full ‘means test’ using allowed expenses and actual expense numbers to determine if the person or couple may still file Chapter 7 bankruptcy or if Chapter 13 bankruptcy is required.
The median income numbers for Nevada and the changes to them coming November 1st, 2010 are summarized below:
| Household Size | Median income until
Oct. 31, 2010 |
Median income after
Nov. 1st, 201 |
Change |
| 1 | $46,151.00 | $42,346.00 | -$3,805.00 |
| 2 | $60,234.00 | $56,612.00 | -$3,622 |
| 3 | $66,813.00 | $59,802.00 | -$7,011 |
| 4 | $70,851.00 | $69,371.00 | -$1,480 |
| 5 | $77,751.00 | $76,871.00 | -$880.00 |
| 6 | $84,651.00 | $84,371.00 | -$280.00 |
| 7 | $91,551.00 | $91,871.00 (increases from here) | +$320.0 |
The household sizes which are most affected are the ones that file more bankruptcies – One (1), Two (2), and Three (3) person households. These household sizes represent a single person, a married couple, and either a married couple with one child or a single parent with two children. If your income is “above median”, i.e. above these median numbers, then the Bankruptcy Code presumes you have enough money left over at the end of each month to pay SOME of your debts and the Code says you need to do Chapter 13 bankruptcy instead. Having said that, if you have high mortgage payments, high medical bills, or a circumstance that causes certain allowable expenses to be higher than usual, you may still be able to file Chapter 7 bankruptcy. Ask a knowledgeable Bankruptcy Attorney such as the Bankruptcy Defender for assistance to do this.
The Results of this change? If you are considering filing Chapter 7, and your income is above the new median income numbers but below the old income numbers, you should contact my office IMMEDIATELY at (702) 425-5100 to schedule an appointment to see if you should file bankruptcy before November 1st, 2010, or risk being in a five (5) year Chapter 13 repayment plan.
photo credit: Thorne Enterprises
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- Tighter Credit Means Fewer Bankruptcies (bucks.blogs.nytimes.com)
- August bankruptcy filings down from last year (mysanantonio.com)
