Feeling like your finances are swirling the proverbial drain? You are not alone. Over 1.5 million people filed for bankruptcy in the United States in 2011. That’s up nearly 12% from 2010. If you have creditors hounding you, bills stacking up, or a pending foreclosure or short sale, a Chapter 7 bankruptcy might be the light at the end of the proverbial tunnel.
The fact is you don’t need a proverb to get actual results to change your finances. What you need is help, and that help comes from a reputable Nebraska bankruptcy attorney who can help you file your petition, so you can get rid of most, if not all of you debts. Yes, it will take some sacrifice and a definite change in your daily budget, but filing will give the chance to have the freedom you and your family deserve.
Bankruptcy – Chapter 7: What is it?
Myth and hype surround bankruptcy, often making it sound scarier than it actually is. Bankruptcy is divided into different categories called Chapters. Each Chapter serves a different purpose. A Chapter 7 bankruptcy, known also as a straight or liquidation bankruptcy provides families and individuals a way to discharge or get rid of unsecured debt.
Filing for a Chapter 7 bankruptcy in Nebraska is a relatively short process. From the time you talk to your attorney to the time your case is discharged, the entire process can take anywhere from three to six months. Most of the debtor’s work will be done before you file, and most of the attorney’s work will be done after you file.
What Does it Take to File a Chapter 7 Bankruptcy
It’s not as easy as deciding to file for bankruptcy. First you must qualify. Federal law mandated under the Bankruptcy Reform Act of 2005 that each debtor wishing to file must fall at or below the median income level for the state they live in. For residents living in Nebraska the income levels vary depending on family size:
- Single individual: $38,915
- Family of two: $54,124
- Family of three: $65,486
- Family of four: $71,097
If a debtor has more than four individuals in a family he must add $7,500 per person. The median income level for Nebraska changes from year to year depending on inflation changes. If you exceed the income level, you may still qualify.
The Means Test
For those who have high amounts of income combined with high amounts of debt, additional financial information will be required by the bankruptcy court. The Reform Act put the means test in place to qualify those who might exceed the income level, and to protect the court against those who wish to fraud the system.
The means test is a mathematical process in which your financial figures are used to determine if you qualify for a Chapter 7 bankruptcy based on the state laws of Nebraska. You bankruptcy attorney may ask for additional information about your finances in order for you to pass the means test.
After You Qualify
Once your attorney determines if you meet the requirements for a Chapter 7 bankruptcy, the next step is to prepare your petition. A set of legal documents, a petition list all of your assets and debts, your exemptions according to Nebraskan state law, proving to the bankruptcy court, that you do indeed qualify to have your debts discharged.
The good news is that bankruptcy law allows for a certain amount of assets or personal property to be exempt from a bankruptcy. This varies from state to state, with some states allowing federal and state exemption laws to work in conjunction with each other. Nebraskan residents are limited to the state exemption laws when filing for a bankruptcy, Chapter 7 or otherwise.
What Can I Keep?
Laws are created to protect people and not destroy them. Even though bankruptcy sounds like you will lose everything, in actuality, the laws provide a good amount of assets to remain with the debtor that’s filing. Some of these exemptions include:
Home Exemption: You are allowed to keep a primary residence worth up to $60,000. If you sell your home within six months after filing bankruptcy, you can keep $60,000 of the proceeds for yourself. If you are married, you may not double this exemption.
- Insurance and Benefits –You may keep 100% or $100,000 of the following insurance exemptions:
- Benefits of accident or health insurance policies
- Fraternal Benefit Society Benefits ($100,000)
- Veterans Administration Benefits
- Railroad Unemployment Insurance
- Proceeds of life insurance policies ($100,000)
- Worker’s Compensation
- Unemployment Compensation
- Personal Affects: $2,500 worth of all personal property of the debtor filing
- Personal Property: $1,500 worth of clothing, books, appliances, and computers
- Interest in stock bonuses, pensions, or profit sharing retirements plans
- Pension of Disabled Veterans
- $2,000 worth of property of a disabled veteran
- Interests in pension or profit sharing plans for Foreign Service Employees
- Vehicle: Any vehicle worth $2,400 or less.
- Wages: Up to 75% of wages may be retained for personal use. (This amount does not include taxed income.)
- Wildcard: A debtor can add $2,500 in value to any exemption listed on the petition except for the home exemption.
As with any state, the Nebraska exemption laws can change from year to year in the amounts available for exemption. For the most current laws, check with your bankruptcy attorney.
It’s time to say goodbye to bad debt and painful feelings. Filing for a Chapter 7 bankruptcy will give you the freedom to live the life you want, instead of how your creditors dictate.
Nebraska Bankruptcy Courts
Robert V. Denney United Staes Courthouse
100 Centennial Mall North, Room 450
Lincolon, Nebraska 68508-3803
Phone: (402) 427-1625
Omaha, Nebraska Bankruptcy Court
Roman L. Hruska United Staes Courthouse
111 South 18th Plaza, Suite 1125
Omaha, Nebraska 68102
Phone: (402) 661-7444