Chapter 13 vs. Chapter 7 Bankruptcy in Nevada: Which One Fits Your Situation?

By John Quigley · NevadaAttorneyFinder.com · Updated July 1, 2026

This article is for informational purposes only and does not constitute legal advice.

Once a Nevada household has decided that bankruptcy is the answer, the next question is which chapter to file — and for most individuals that comes down to Chapter 7 versus Chapter 13. Chapter 7 is the fast liquidation that erases qualifying debt in roughly 100 days; Chapter 13 is a three-to-five-year court-supervised repayment plan that lets you keep everything and catch up on what you are behind on. The right choice turns on four things: whether you pass the means test under 11 U.S.C. § 707(b), whether you are behind on a home or car you want to keep, whether your assets fit inside Nevada's generous exemptions under NRS 21.090 and the NRS 115.010 homestead of up to $605,000, and whether you carry priority debts like recent taxes or child-support arrears that a Chapter 7 cannot touch. This guide walks through how each chapter works in the District of Nevada, the specific tools Chapter 13 offers that Chapter 7 does not — curing a foreclosure, car-loan cramdowns, and stripping a wholly underwater second mortgage — the exemption analysis that decides which chapter protects your property, the debt limits, the cost difference, and how a Las Vegas bankruptcy attorney frames the decision.

The Two Chapters in Plain Terms

Both chapters are federal proceedings filed in the United States Bankruptcy Court for the District of Nevada — the Foley Federal Building at 300 Las Vegas Boulevard South for Clark County filers. Both trigger the automatic stay under 11 U.S.C. § 362 the instant the petition is filed, which stops wage garnishments, bank levies, collection calls, lawsuits, foreclosures, and repossessions cold. Both require pre-filing credit counseling under § 109(h) and a post-filing financial management course. What differs is the mechanism of relief.

Chapter 7 (11 U.S.C. §§ 701–784) is a liquidation. In theory the Chapter 7 trustee sells your non-exempt property and distributes the proceeds to creditors; in practice, the overwhelming majority of Nevada consumer cases are no-asset cases because everything the filer owns is protected by NRS 21.090, so the trustee liquidates nothing and the filer keeps all of it. Roughly 90 to 120 days after filing, the court enters a discharge under 11 U.S.C. § 727 wiping out personal liability on qualifying unsecured debt. It is fast, it is inexpensive, and it requires no repayment.

Chapter 13 (11 U.S.C. §§ 1301–1330) is a reorganization, sometimes called the "wage-earner plan." Instead of liquidating, the filer proposes a repayment plan under § 1321 that runs three years (for below-median filers) or five years (for above-median filers). The filer makes a single monthly payment to a standing Chapter 13 trustee, who distributes it to creditors according to the plan. Secured arrears get cured, priority debts get paid in full, and unsecured creditors receive whatever the plan and the law require — sometimes pennies on the dollar. When the filer completes the plan, the court enters a discharge under 11 U.S.C. § 1328 that wipes out the remaining balances.

Step One: The Means Test — Does Chapter 7 Even Allow You In?

The single biggest gatekeeper is the means test under 11 U.S.C. § 707(b). A filer with primarily consumer debts must compute average gross household income for the six full calendar months before the filing month, annualize it, and compare it to the Nevada median family income for a household of that size (published quarterly by the U.S. Trustee Program). As of 2026 the Nevada median figures are approximately $61,000 for a household of one, $77,000 for two, $86,000 for three, and $99,000 for four, with roughly $9,900 added per additional person — the exact current numbers should be confirmed against the U.S. Trustee Program's published figures on the filing date.

If your income is at or below the Nevada median, you pass and may file Chapter 7. If you are above the median, you complete the long-form means test (Official Form 122A-2), subtracting IRS-standard and actual allowed expenses to arrive at monthly disposable income. Too much disposable income creates a presumption of abuse, and the case is typically converted to — or must be re-filed as — Chapter 13. In other words, failing the means test is the most common reason a Nevada filer ends up in Chapter 13 rather than Chapter 7. (The means test does not apply at all when more than half your debts are non-consumer debts, such as a former business owner's personal guarantees.)

Step Two: Are You Behind on Something You Want to Keep?

This is where Chapter 13 earns its keep, and where Chapter 7 simply cannot help. Chapter 7 has no mechanism to cure past-due payments. If you are three months behind on a Summerlin mortgage and file Chapter 7, the automatic stay pauses the foreclosure, but the moment the case ends the lender resumes the trustee's sale unless you have separately caught up the arrears in cash. Chapter 13 solves exactly this problem.

Curing a foreclosure. Under 11 U.S.C. § 1322(b)(5), a Chapter 13 plan may cure a default on a home mortgage by spreading the arrears across the three-to-five-year plan while the filer resumes the regular monthly payment. Nevada is a non-judicial foreclosure state under NRS 107.080, so a trustee's sale can be scheduled quickly once a homeowner falls behind; filing Chapter 13 before the sale stops it and gives the homeowner a structured way to reinstate the loan over time rather than in one lump sum. This is the number-one reason Las Vegas homeowners choose Chapter 13 over Chapter 7.

Car-loan cramdown. Chapter 13 can reduce (or "cram down") the balance on an upside-down car loan to the vehicle's actual value, with the remainder treated as unsecured. The catch is the "hanging paragraph" after 11 U.S.C. § 1325(a)(9): the vehicle must have been purchased for personal use more than 910 days before filing. A car bought within that window cannot be crammed down. When it applies, cramdown is powerful — a $16,000 loan on a car worth $9,500 becomes a $9,500 secured claim paid at a court-set interest rate, and the $6,500 difference is lumped in with general unsecured debt.

Stripping an underwater second mortgage or HELOC. If a Las Vegas home is worth less than the balance on the first mortgage, a wholly unsecured second mortgage or home-equity line can be "stripped off" in Chapter 13 and treated as unsecured debt, so it is discharged at the end of the plan. This lien-stripping remedy is available in Chapter 13 but generally not in Chapter 7 under the Supreme Court's decision in Bank of America v. Caulkett. For homeowners still underwater from a prior downturn, this alone can justify choosing Chapter 13.

Co-debtor protection. Chapter 13 adds a co-debtor stay under 11 U.S.C. § 1301 that shields anyone who co-signed a consumer debt with you from collection during the case — a protection Chapter 7 does not provide.

Step Three: The Exemption Analysis — Which Chapter Protects Your Property?

Nevada has opted out of the federal exemption scheme under NRS 21.090(3), so both Chapter 7 and Chapter 13 filers use Nevada's state-law exemptions. The headline is the homestead: NRS 115.010 protects up to $605,000 of equity in a primary residence, one of the most generous homestead exemptions in the country. NRS 21.090 layers on additional protections that matter to the chapter choice:

• Vehicle — up to $15,000 of equity in one motor vehicle per debtor under NRS 21.090(1)(f) (unlimited if equipped for a person with a disability).
• Household goods, furnishings, electronics, apparel — up to $12,000 in aggregate under NRS 21.090(1)(b).
• Tools of the trade — up to $10,000 under NRS 21.090(1)(d).
• Retirement accounts — 401(k), IRA, pension, and similar qualified plans are fully exempt under NRS 21.090(1)(r).
• No wildcard — Nevada has no general wildcard exemption, so cash, cryptocurrency, a second vehicle, a boat, or a brokerage account may fall outside the categorical exemptions.

Here is why the exemption math drives the chapter choice. In Chapter 7, any asset that does not fit an exemption belongs to the trustee, who can sell it. A filer with a paid-off second car worth $18,000, a $40,000 brokerage account, or $300,000 of home equity when the homestead only shelters part of it faces losing that property in a Chapter 7. Chapter 13 lets that same filer keep every asset — nothing is liquidated — but the trade-off is the "best-interest-of-creditors" test under 11 U.S.C. § 1325(a)(4): the plan must pay unsecured creditors at least as much as they would have received if the non-exempt assets had been liquidated in a Chapter 7. So a filer with $20,000 of non-exempt equity keeps the asset but must pay at least $20,000 to unsecured creditors over the life of the plan. For many Las Vegas homeowners whose equity has grown past the homestead cap, Chapter 13 is the only way to file without risking the house.

Step Four: Non-Dischargeable Debts — What Chapter 13 Can Do That Chapter 7 Cannot

Some debts survive a Chapter 7 discharge no matter what: recent income taxes (generally those due within the last three years), child support and alimony arrears, and certain other priority obligations under 11 U.S.C. § 523. Chapter 7 wipes the credit cards and medical bills but leaves those priority debts fully owing the day the case closes, still collectible, still accruing.

Chapter 13 gives you a structured way to deal with them. Under 11 U.S.C. § 1322(a)(2), priority debts must be paid in full through the plan — but "through the plan" means over three to five years, penalty-managed, inside the protection of the automatic stay, with the IRS and the Nevada child-support enforcement office barred from independent collection while you pay. A filer with $18,000 of recent tax debt and $9,000 of child-support arrears can pay both off over 60 months at a rate the household can actually afford, then discharge whatever unsecured debt remains. Chapter 13 also offers a slightly broader discharge under § 1328 for a narrow set of obligations (such as certain property-settlement debts from a divorce) that would survive a Chapter 7.

The Debt Limits and Eligibility Cutoffs

Chapter 13 is only open to individuals (not corporations or LLCs) with regular income, and only up to the debt caps in 11 U.S.C. § 109(e). As of 2026 those limits are approximately $526,700 in noncontingent, liquidated unsecured debt and about $1,580,125 in secured debt, adjusted every three years — confirm the current figures on the filing date. A filer whose debts exceed these caps cannot use Chapter 13 and would look to Chapter 7 (if eligible) or Chapter 11. Chapter 7, by contrast, has no debt ceiling but is gated by the means test and by the eight-year bar on successive Chapter 7 discharges under § 727(a)(8). A filer who received a Chapter 7 discharge within the last eight years but needs relief now can often still file Chapter 13, because the waiting period between a prior Chapter 7 and a Chapter 13 discharge is only four years under § 1328(f).

How a Nevada Chapter 13 Case Actually Runs

• Petition, schedules, and plan. The filer files the voluntary petition, the schedules of assets and liabilities, the Statement of Financial Affairs, the means test, and — unique to Chapter 13 — a proposed Chapter 13 plan (District of Nevada uses a mandatory local plan form). The filing fee is $313.
• First plan payment in 30 days. Under 11 U.S.C. § 1326(a)(1), the filer must begin making the proposed plan payment to the trustee within 30 days of filing, even before the plan is confirmed.
• 341 meeting of creditors. Held 21 to 50 days after filing; the standing Chapter 13 trustee places the filer under oath and reviews the plan and schedules.
• Confirmation hearing. The bankruptcy judge confirms the plan under 11 U.S.C. § 1325 if it meets the good-faith, best-interest, feasibility, and disposable-income requirements. Creditors and the trustee may object; confirmation issues are worked out here.
• Three to five years of payments. The filer makes monthly payments to the trustee, who distributes to creditors. Missing payments can lead to dismissal, so the plan must be built around a realistic budget.
• Discharge. After completing all plan payments and the financial management course, the filer receives a discharge under § 1328 wiping out remaining eligible balances.

The Cost Difference

Filing fees are close: about $338 for Chapter 7 and $313 for Chapter 13. Attorney fees are where the two diverge. A straightforward Las Vegas Chapter 7 typically runs about $1,000 to $2,500, and because the case is short, the fee is generally paid in full before filing. A Chapter 13 attorney fee is higher — commonly $4,000 to $5,000 — but it is usually paid through the plan over time rather than up front, which is often why a cash-strapped filer can afford to start a Chapter 13 at all. The District of Nevada uses a "no-look" (presumptively reasonable) fee for standard Chapter 13 cases, meaning counsel can charge up to a set amount without filing an itemized fee application; anything above that requires court approval. When you compare the two chapters on cost, the more useful comparison is not just the fee but the total three-to-five-year plan outlay in Chapter 13 versus the one-time cost of Chapter 7.

So Which One Fits? A Quick Decision Framework

Chapter 7 is usually the better fit when your income is at or below the Nevada median, your debts are mostly unsecured (credit cards, medical bills, personal loans), you are current on — or willing to surrender — your house and car, your assets fit inside the NRS 21.090 exemption stack, and you want the fastest, cheapest possible discharge. For a renter with $45,000 of credit-card and medical debt, a modest car, and below-median income, Chapter 7 is almost always the answer.

Chapter 13 is usually the better fit when you fail the means test, you are behind on a mortgage or car you want to keep and need to cure the arrears over time, you have significant non-exempt equity you would lose in a Chapter 7, you carry priority debts like recent taxes or support arrears that need a structured payoff, you want to strip an underwater second mortgage, or you received a Chapter 7 discharge within the last eight years. For a homeowner two payments behind on a Henderson mortgage with $30,000 of equity above the homestead and above-median income, Chapter 13 is the tool that keeps the home.

The honest answer for many Nevada households is that only a side-by-side analysis of the actual numbers reveals the right chapter — and sometimes a case that starts in one chapter is later converted to the other. That is exactly the analysis a Las Vegas bankruptcy attorney runs before recommending a path, and it is why the same lawyer who files your Chapter 7 can pivot you into a Chapter 13 if the facts require it. If a homeowners-association lien or assessment dispute is part of what pushed you toward filing, our guide to Nevada HOA disputes and homeowner rights explains how those debts are treated. For a deeper look at the liquidation option on its own, see our Nevada Chapter 7 bankruptcy guide, and for what representation actually costs, our bankruptcy cost guide.

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