Are you thinking about filing for bankruptcy in the state of Nebraska but aren’t sure how to begin? This blog post explains how to declare bankruptcy in Nebraska.
The average American has over $90,000 in debt. If you’re struggling to manage your bills and put food on the table, you may have the option to declare bankruptcy.
Bankruptcy can sound like a scary word, but it helps millions of Americans. If you’re considering the process, you’ll want to do as much research as possible and consult a bankruptcy lawyer.
To start, let’s take a look at what exactly it means to declare bankruptcy in Nebraska.
What Does it Mean to Declare Bankruptcy?
Bankruptcy exists to help individuals who can no longer pay their debts. Bankruptcy laws are handled in federal court, so filing in Nebraska isn’t necessarily different from filing in any other state.
It’s important to note that Nebraska has certain exemptions from the bankruptcy process. When you work with a bankruptcy attorney, they will explain which exemptions may apply to your situation.
Taking care of debt is typically done in one of two ways. First, there’s liquidation, which is where a person sells their assets to pay their debts. The second is called reorganization, which is the process of establishing a court-approved repayment plan.
What Are the Types of Bankruptcy?
In total, there are six different types of bankruptcy. They include:
- Chapter 7
- Chapter 9
- Chapter 11
- Chapter 12
- Chapter 13
- Chapter 15
For individuals, Chapter 7 and Chapter 11 are the most common. Let’s break those types down, so you can get an idea of what your options are.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most commonly filed type of bankruptcy. It offers individuals a liquidation process to pay off their debts.
If you apply for this type of bankruptcy, a court-appointed trustee will be assigned to the sale of your assets. Assets are anything that has value. The money made from the sale will be given to your creditors.
If all of your assets are liquefied and you still have remaining unsecured debt, like credit cards or medical bills, the amount is often erased. However, certain debts, like taxes or student loans, cannot be erased.
To determine if you’re eligible for Chapter 7 bankruptcy, you’ll take a means test to compare your income to Nebraska’s state average. If the court believes you do not make enough money to pay your creditors back, you will likely be approved.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is the second most commonly filed type. Instead of liquidating assets, Chapter 13 lets you reorganize your debt.
If you choose to apply under Chapter 13, the court needs to approve a monthly payment plan so you can pay back all of your unsecured debt. It’s likely a portion of your secured debt will be included as well.
With Chapter 13, you can retain your assets while paying off your debts. To qualify, your unsecured debt needs to be less than $419,275, and your secured debt needs to be less than $1,257,850.
In terms of the other types of bankruptcy, Chapter 11 is exclusively for businesses, and Chapter 9 is for towns, cities, and school districts. Chapter 12 bankruptcy is for family farmers and fishermen, and Chapter 15 focuses on international bankruptcy issues.
Filing for Bankruptcy in Nebraska
While there is a process involved with filing for bankruptcy, every situation is different. When you seek help from an attorney for bankruptcy in Nebraska, they will walk you through the steps.
Before you file, you’ll be required to take a course about bankruptcy and the alternatives. While you do that, your lawyer will collect information about your case, including all of your financial information.
Once your attorney has all of the information they need, you can file your petition. Depending on how you file, you may or may not need to deal with liquidating assets.
Then, a bankruptcy trustee will be appointed to your case. A hearing will occur and creditors can attend the meeting and ask questions or object. If there are no objections to your liquidation or repayment plan, the court will approve your bankruptcy filing.
After the court has approved your filing, you may be required to take financial management courses. Once you’ve completed those and your debt is taken care of, the court will discharge your case. This clears your debt and gives you the chance to start over.
What To Do After You Declare Bankruptcy
One of the biggest consequences of filing for any type of bankruptcy is the hit to your credit score. Both Chapter 7 and Chapter 13 can and likely will negatively impact your score.
Chapter 7 can stay on your credit report for up to ten years, while Chapter 13 only stays on for up to seven years. However, the good news is that during that time, you can work on your financial health and get your credit score back up.
Rebuilding your credit can begin as soon as your bankruptcy discharge happens. Your score will improve a bit on its own as there will be no missed payments, and discharged accounts will have a zero-dollar balance.
Part of rebuilding your credit score is making wise financial decisions. You may want to consider getting a secured or unsecured credit card after filing and maintaining a good payment history. Pay off your debt every month, and before you know it, your score will be healthy again, and you can put your financial troubles behind you.
Contact Husker Law in Omaha
If you’re looking to declare bankruptcy, it’s best to find a bankruptcy lawyer you can trust. Not only will they ensure that filing is in your best interests, but they can help you take the next steps after filing to ensure a more sound future.
At Husker Law, our attorneys are well-versed in Nebraska bankruptcy laws, and are prepared to help. Contact us at (402) 415-2525 today to learn more.
