How to File for Bankruptcy in Nebraska

While Nebraska has one of the lowest bankruptcy rates in the country, it has increased nearly 25% in the last two years.  With the economy suffering, and many citizens struggling to meet their obligations, it is important that they understand what options that are open to them.  Indeed, there are many con artists attempting to temp debtors into solutions that don’t help anyone but the con man.   There are a number of options, but it takes an expert to help debtors find the right solution for them, and that can often be found in a knowledgeable bankruptcy attorney.  Not only are they legal experts, they are aware of the legal means to help solve the financial problems of individuals.

Finding a Bankruptcy Attorney

It is important for debtors to choose their lawyer carefully.  There are many jumping on the bankruptcy bandwagon in these difficult times, but not all are experienced or skilled.  Debtors should

• Investigate candidate’s experience and track record carefully
• Get recommendations from the state bar association, reliable legal websites, friends and neighbours
• Interview each candidate and get a written list of services and fees to compare

Bankruptcy Options

There are six types of bankruptcy to choose from, but for individuals, there are two common choices:

• For those with no assets or few assets, Chapter 7 may be the best choice.  Chapter 7 is considered liquidation bankruptcy because the court-appointed bankruptcy trustee is allowed to liquidate all non-exempt property to pay creditors.  The process generally discharges, or erases, the remaining unsecured debt.
• For those with assets they wish to protect from liquidation and enough monthly disposable income to make regular debt payments, Chapter 13 may be the right choice.  Their assets and debts are reorganized and they create a “good faith” three- to- five-year repayment plan that is both in the “best interests” of the creditors and the “best efforts” of the debtor.  Any debts not paid off under this plan may be discharged.

Nebraska Exemptions

Nearly three-fourths of all filers in Nebraska choose Chapter 7.  For these debtors, it is important to know what property exemptions are available to protect that property from liquidation.  Only state, not federal, exemptions apply, which include:

Filing the Petition

For most filers, there is little, if any, court time required.  The filer must attend credit counselling first, after which they and their attorney can file their bankruptcy petition with the court.  The court appointed bankruptcy trustee will then:

• Review the petition to ensure it is qualified and complete and to determine which, if any, assets are to be liquidated
• Schedule a 341 hearing, named for the section of the code, to review and ask any questions about the filer’s assets and petition and to allow creditors to ask any questions they have
• If necessary, an unqualified Chapter 7 petition will be converted to Chapter 13
• Chapter 13 filers must meet with the judge to have their repayment plan approved
• Debtors must attend an approved debt education course
• Most Chapter 7 unsecured debts are discharged, or erased
• Chapter 13 filers repay their debts according to the court-appointed plan before their remaining debts are discharged as well.