Omaha, NE – Fortunately, this is just one of the many myths surrounding bankruptcy. When someone cannot pay their debts anymore, filing for bankruptcy may be their best option. Their debts will be discharged and with a little help from experienced lawyers, they’ll be able to keep most of their assets.
What type of bankruptcy do I qualify for?
First of all, you must learn about the two types of bankruptcy available. On the one hand, there’s Chapter 7, which does involve selling your property to cover your debt. This refers only to non-exempt property and you must seek counsel from skilled Omaha bankruptcy lawyers to understand how exemptions work.
On the other hand, if you file under Chapter 13 you don’t have to sell anything. Instead, the court will issue a 3-5-year plan allowing you to pay your debt in monthly installments.
Your lawyers will check for what type of bankruptcy you qualify for. Chapter 7 is for people whose annual income is below the median income in Nebraska. Just to give you an example, in 2020, the median income for a 3-person family was $85,929. These figures are regularly updated for inflation so you should ask your lawyers about them.
Can I keep my house when filing for bankruptcy in Nebraska?
Unlike other states, Nebraska does not recognize federal exemptions. If you file for bankruptcy in Omaha, you must use Nebraska’s bankruptcy exemptions. Nebraska bankruptcy lawyers say that this is actually a good deal as state exemptions are more generous than federal ones.
According to the law, you can save your home if the equity you have in it is less than $60,000. Equity represents the difference between the current value of an asset and the amount you still owe on it. Note that the price you paid for it when you bought it doesn’t matter. The bankruptcy trustee will take into account what they can get on the property at today’s market value.
As an example, if your house is worth $200,000 and you still owe $150,000, your equity is $50,000. This sum is entirely covered by the homestead exemption, so the trustee will let you keep the house.
In most cases, the law allows people to double the value of an exemption when filing as a couple. However, in Nebraska you cannot do this when it comes to the homestead exemption. It’s still $60,000, no matter if you file as a single person or with your spouse.
Can I keep my car?
Lawmakers know that taking away someone’s car may leave them unable to work and support themselves. Under Nebraska’s motor vehicle exemption, a debtor may keep their car if their equity is less than $5,000.
What is the Wildcard Exemption?
The wildcard exemption allows you to protect any personal property you want up to a value of $5,000. The money cannot be used to increase the value of your homestead exemption. Skilled Omaha bankruptcy lawyers point out that many debtors use the wildcard exemption to save their cars. Yet, keeping an expensive car may not be your best option. You can also use it to save more of your furniture or an item that has both monetary and emotional value, like your Mom’s old piano.
Other bankruptcy exemptions you can use in Nebraska:
- Personal property – An unlimited amount of personal possessions, such as clothing or health aids, and up to $3,000 in furniture and household goods.
- Pension, retirement, and life insurance benefits are exempt under Nebraska laws.
- Wages – You will be allowed to keep 75% of earned but unpaid earnings or 30 times the federal minimum wage.
If you have a good lawyer on your side, you may get rid of all the debt and keep your house, your car, and the clothes on your back.
If you’re considering bankruptcy, you’ll be dealing with lawyers and clerks for the next few months. Do yourself a favor and educate yourself on legal matters.
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