Bankruptcy filings increase every year in the US. In my hometown, Las Vegas, bankruptcy has become a very real situation for many. Before you talk to a Las Vegas bankruptcy lawyer, you should have an idea of what you’re getting yourself into.

Filing for bankruptcy is not the end of the world. Look at Donald Trump; he was once $900 million in personal debt and almost $3.5 billion in business debt. Trump has filed business bankruptcy four times, most recently in 2009, and he is still estimated to be worth over 2 billion dollars. Bankruptcy is not the end of the world.

One of the first and most frequent questions people have about filing for bankruptcy: Will I be able to keep my home? This depends very much on which type of bankruptcy you file: Chapter 7 or Chapter 13. The first thing your bankruptcy lawyer will have you do is take what is known as a "Means Test."

The means test is used to determine whether you are able to afford a Chapter 13 payment plan. If you are truly insolvent or your income is so low that a payment plan isn't feasible you may qualify for Chapter 7 bankruptcy. The government designed this means test to reserve the Chapter 7 filings for those who absolutely need it. Chapter 7 is reserved for the financially destitute.

The means test is two pronged. The first part is simple; it compares your income to the median income of a household of equal size in your state. Here are the statistics for Nevada as of March 15 2011:

Single person: $43,041

Two person: $57,541

Three person: $60,783

Four person: $70,509

If your median income is above the state average it doesn't mean you automatically do not qualify for Chapter 7. What it does do is trigger the 2nd part of the test.

Part two of the test calculates your disposable income and unsecured debts. This process is more complex than comparing your income with the state median. Basically, if your disposable income for the next five years is under $6000 you will likely still be able to file under Chapter 7. If your disposable income is over $10,000 over the next five years, it will likely be deemed that you don't need to file Chapter 7 and your attorney will likely recommend you file Chapter 13.

Filing Chapter 7 bankruptcy will not prevent your home from being foreclosed on if you are behind on your mortgage. A Chapter 7 filing will allow you to delay a foreclosure on your home for approximately three months. However, if you are up to date on your mortgage payments and you file a homestead exemption, you will be able to keep your home. The amount you can save with a homestead exemption varies from state to state, so it is important for you to discuss this option with a Las Vegas bankruptcy attorney.

Unlike Chapter 7, filing for Chapter 13 bankruptcy will stop a foreclosure and you will be able to retain your home even if you are behind in your mortgage payments.

Under Chapter 13 your bankruptcy lawyer will lay out a plan of payment for you to repay your debt. The plan has a maximum duration of 5 years. Also, under Chapter 13 the creditors do not have to agree on your repayment plan, only the bankruptcy court must agree to your plan.

Under Chapter 13 if you have a second mortgage that may be stripped all together during your proceedings. Be sure to ask your Las Vegas bankruptcy lawyer.

U.S. Law recommends you seek the advice of a financial adviser before considering filing for bankruptcy, which I do recommend, but a consolidation plan from a private firm may only prolong the inevitable.

No matter what you decide to do, it is important that you consult a local professional bankruptcy attorney. Bankruptcy laws vary from state to state, so find an attorney with a lot of local experience. I hope this article helped to inform and alleviate stress during what can be a very confusing and during what can be a very trying and confusing time.