Federal law allows states to enact their own regulations governing what assets their citizens can shield from creditors. To help people go on with their lives following bankruptcy, Nebraska has decided to enact its own laws regarding exempt property.
In some states, you may be given the option to choose between federal exemptions found in the Bankruptcy Code and state law exemptions. Nebraska, however, is not one of them. You must use the Nebraska exemptions if you file for bankruptcy in the state.
Regardless of the type of personal bankruptcy you file for, exemptions are a crucial part of the bankruptcy process.
Exemptions have a significant impact on Chapter 7 since they greatly influence how much of your property you can keep. Additionally, you will typically emerge from bankruptcy almost debt-free. But to be eligible, you must first meet severe income requirements.
People with stable incomes who file for Chapter 13 bankruptcy can reorganize most of their debt and pay it off in three to five years. The payments are made per a court-approved plan that typically results in some debt forgiveness. Homeowners prefer Chapter 13 because they can frequently keep their properties.
The court will automatically impose a stay when you file for either type of personal bankruptcy. The stay stops almost all debt collection efforts, including foreclosures and legal actions. This gives you the breathing room to deal with debt issues and stops collection agencies from pestering you.
In Nebraska, Am I Eligible for Bankruptcy?
Like all other states, Nebraska requires proof that your income is too low to qualify for Chapter 7. Typically, one of two means tests are used for this.
You qualify if your household’s income is lower than the median household income for households of similar sizes in your state.
According to U.S. Census data, the median income for a three-person household in Nebraska in November 2020 was $85,929. In other words, if your three-person household has an annual income of less than $85,929, you can apply for Chapter 7 bankruptcy in Nebraska.
Based on your disposable income, you may still qualify for Chapter 7 if your household income is higher than the Nebraska median. By deducting your monthly expenses from your monthly income, you can determine your monthly disposable income. You may petition for bankruptcy under Chapter 7 if the calculation reveals that you have little monthly discretionary income.
You must have a stable income and unsecured debt of no more than $419,275 to petition under Chapter 13. You may not owe more than $1.26 million in secured debt.
Nebraska Exemptions from Bankruptcy
The exemption system in Nebraska is crucial to a Chapter 7 bankruptcy. If your income qualifies for an exemption, you can utilize it to start fresh after filing for bankruptcy and keep it safe from creditors.
If a married couple owns the property jointly, each spouse may often claim an exemption when the pair files for bankruptcy together in Nebraska. But this “doubling” “The homestead exemption is not one of the state’s exemptions.
In Nebraska, you can exclude up to $60,000 of your home equity. Whether you file for bankruptcy together with your spouse or separately, this sum remains the same. The first $60,000 of the earnings from the sale of your house are deductible for up to six months following the sale.
The exemption is restricted to two or fewer lots if the house is in a city or village. If it is situated somewhere else, the maximum is 160 acres.
Exemption from Pay
Up to 85% of unpaid wages, 75% of earned but unpaid income, or 30 times the federal minimum wage may all be excluded by the head of the family. A judge might permit you to keep more of your pay in particular circumstances.
Personal Property Exemption
The state of Nebraska permits you to keep all of your immediate personal belongings, necessary clothing, and medical supplies. Additionally, you are permitted to keep up to $1,500 in household items and furniture.
Other than salary, you may keep certain personal belongings worth up to $2,500. The size of the exemption you are permitted for that item may be increased by adding the wildcard exemption to another exemption.
Previously, if you claimed the homestead exemption, you were not eligible to use the wildcard exemption, but in 1997, the legislation was altered to allow everyone to do so.
Exemption for Motor Vehicles and Trade Equipment
Most states will grant you an exemption for a portion of any equity you may have in your car.
Unfortunately, Nebraska only offers a $2,400 exemption if you use the car to travel to work or run your business. Any equipment and devices you utilize for your job or trade are likewise exempt from this rule.
Benefits from Insurance Exemption
Benefits from the following insurance plans are exempt:
- A maximum of $100,000 of the loan value may be paid back with an annuity or life insurance payout.
- From a fraternal benefits society, up to $10,000 of the loan amount may be used for fraternal benefits.
Exemptions for Pensions and Retirement
In Nebraska, the majority of pension and retirement plans are excluded, including:
- 401(k), IRA, and other tax-exempt retirement accounts, as well as defined benefit pension schemes
- Retirement benefits for state, county, and school employees
- Benefits for veterans’ disabilities, not to exceed $2,000
Exemptions from Public Benefits
- Awards for wrongful death or personal injury and structured settlements.
- Crypts, niches, tombs, vaults, or burial grounds
In Nebraska, How Do I File for Bankruptcy?
You must first finish a counseling course within 180 days of filing if you intend to file for bankruptcy. The course’s goal is to determine if you can repay your debts without declaring bankruptcy.
If you intend to file under Chapter 13, you could be required to put together a repayment plan while doing so to submit it to the court. Along with your bankruptcy filing, a certificate of course completion is required.
Finding and downloading the appropriate forms for the U.S. Bankruptcy Court for the District of Nebraska is the first step in the bankruptcy procedure when you represent yourself without counsel. You may find information on the other forms and documents that must be submitted with your petition in the instructions that are included with the form.
In Nebraska, How Much Does Bankruptcy Cost?
In Nebraska, Chapter 7 bankruptcy filings cost $338, while Chapter 13 filings cost $313. The costs are the same if you attend “pro se” (on your own behalf) “) or if you retain legal counsel. You can seek to pay the filing fee in installments over a 120-day period if you are unable to do so. You can ask to have the charge waived if your income is less than 150% of the poverty level.
Need Assistance Declaring Bankruptcy in Nebraska?
Before filing bankruptcy paperwork, it is crucial to speak with a lawyer because bankruptcy is complicated. A Nebraska bankruptcy attorney familiar with Nebraska law can assist you in keeping your exempt property and prevent typical filing errors.