Filing a Chapter 13 bankruptcy in Nebraska can help you take control of your finances and get out of debt. It may be a good option if you do not qualify for a Chapter 7. The bankruptcy process allows you to eliminate debts you cannot pay while keeping your property. Ascend can help you compare your debt-relief options, including a Chapter 13 bankruptcy in Nebraska.
The goal of this article is to fully inform you about a Chapter 13 in Nebraska by covering the following things:
- Chapter 7 vs. Chapter 13 Bankruptcy in Nebraska
- Calculating Chapter 13 Plan Payments in Nebraska
- Means Testing in Nebraska
- Nebraska Credit Counseling and Debtor Education Courses
- Nebraska Bankruptcy Exemptions
- Bankruptcy Courts and Trustees for Nebraska
- Alternatives to Filing Bankruptcy in Nebraska
Chapter 7 vs. Chapter 13 Bankruptcy in Nebraska
Filing a bankruptcy case under Chapter 7 may be available if you meet the income requirements for a bankruptcy discharge (debt forgiveness). If the debtor (the person who files for bankruptcy relief) does not have significant equity in property that could repay some of the debtor’s creditors, then Chapter 7 bankruptcy cases are relatively quick. In most cases a Chapter 7 case takes about four to six months to complete after filing the Chapter 7 petition.
Chapter 13 bankruptcy cases permit debtors to spread out back mortgage payments over time to avoid losing their homes in foreclosure. A Chapter 13 plan may also help you lower your car payments or the interest on your car payments. Through Chapter 13, you can catch up alimony and child support payments and pay back taxes to avoid wage garnishments and levies.
However, a Chapter 13 case can take at least five years to complete. During that time, a Chapter 13 trustee can monitor your income to determine if you can afford to pay more toward your debts. A Chapter 13 case prohibits you from borrowing money or selling large assets without bankruptcy court approval.
Calculating Chapter 13 Plan Payments in Nebraska
A Chapter 13 plan payment in Nebraska depends on your specific financial situation. Several factors that you need to consider when calculating a Chapter 13 plan are your debts, income, assets, and expenses. Also, recent financial transactions could impact your plan payment. You can estimate your Chapter 13 plan payment below.
A Chapter 13 bankruptcy plan does not treat all debts equally. Some creditors will receive payment in full, while other creditors will only collect a small percentage of the original account balance. For instance, mortgage arrearage (past due mortgage payments) must receive payment in full if you plan to keep your home. Your car loan may be paid in full through the plan. Also, tax debts are typically paid in full as well.
However, credit card bills, medical bills, personal loans, and other general unsecured debts may not receive payment in full. Debts that are eligible for a discharge are forgiven when you complete the Chapter 13 plan. Student loans are typically not eligible for a bankruptcy discharge. You will owe any remaining balance on your student loan payments upon the conclusion your bankruptcy case. Some debtors try to make payments during the Chapter 13 case so they can be debt-free except for their mortgage when they exit bankruptcy.
Means Testing in Nebraska
The Means Test can also have an impact on your Chapter 13 plan payment. Every debtor must complete the Means Test as part of the bankruptcy process. Congress added this bankruptcy form when it revised the Bankruptcy Code in 2005.
To complete the Means Test, you need several pieces of information. You need evidence of household income for the six months immediately prior to the month you file your bankruptcy petition. You also need your monthly expenses.
Calculating Current Monthly Income (CMI) and Median Income
Current monthly income is the average of your income for the past six months. Income includes all income received from any source other than income received under the Social Security Act (Social Security disability and Social Security Income). It also includes income that your spouse earns or receives, even if your spouse does not file Chapter 13 with you. CMI is based on household income because the expenses you are allowed to claim is based on the number of people living in your home.
To calculate median income, you multiple your CMI by twelve. If your median income exceeds the Nebraska median income for a household of your size, your Chapter 13 plan must be calculated based on 60 months.
The median income figures for Nebraska adjust periodically to reflect the most current data for income throughout the state. You can view the median income figures of Nebraska by clicking here or see the table below. The most current data is for cases filed on or after May 1, 2020. Please note that the table below is limited to 9 members in a household. If your household exceeds 9 persons, you would just add $9,000 for each additional household member.
|# of People||Annual Income|
Calculating Disposable Income for a Chapter 13 Plan
There is a second part of the Chapter 13 Means Test that calculates your disposable income. Disposable income equals your current monthly income, less payroll deductions and living expenses. Your disposable income determines the amount you must pay through your Chapter 13 plan. Therefore, you want to deduct all allowable expenses to reduce disposable income as low as possible.
Allowable expenses include, but are not limited to, food, clothing, mortgage payments, rent, car loans, life insurance, childcare expenses, health care expenses, and transportation costs. Some of these expenses are based on National Standards. The amounts you may deduct for these expenses are based on the number of people in your household.
Also, you may not be permitted to deduct all expenses or the total of all expenses. You may also need proof of expenses that are higher than average. The National Standards for food, clothing, household goods, transportation, and other costs are available on the website for the United States Trustee’s Office.
Nebraska Credit Counseling and Debtor Education Courses
Before filing your Chapter 13 bankruptcy in Nebraska, you need to complete the first of two bankruptcy courses. The certificate of completion for the Credit Counseling Course should be filed with your bankruptcy petition. After filing a Chapter 13 case, you need to complete a Debtor Education Course.
Nebraska Bankruptcy Exemptions
Federal bankruptcy exemptions can be found in 11 U.S.C. §562. These exemptions protect the equity in a debtor’s property from repaying debts. In a Chapter 7 case, the trustee could sell property that has non-exempt equity and use the funds to pay unsecured creditors. In a Chapter 13 case, non-exempt equity is a factor in calculating the Chapter 13 plan payment. The NCLC has a list of the current federal bankruptcy exemptions on its website.
Nebraska has chosen to enact state bankruptcy exemptions that debtors must use if they have resided in the state at least 730 days before the filing of the Chapter 13 petition. If you have not lived in Nebraska for at least two years before filing Chapter 13, you may need to use the federal bankruptcy exemptions or another state’s exemptions.
Each of the allowed bankruptcy exemptions protects a certain amount of equity in a specific piece of property. Commonly used bankruptcy exemptions include, but are not limited to:
- Homestead exemption, which is currently $60,000
- Vehicle exemption of $2,400
- Household goods and furnishings exemption of $1,500
- Unlimited exemption in immediate personal possessions
- Health care devices
- Necessary wearing apparel
- Retirement accounts
- Public benefits
The amounts of the Nebraska bankruptcy exemption are subject to change. You should review the current exemptions to ensure you use the correct values.
Bankruptcy Courts in Nebraska
Nebraska has one jurisdiction for bankruptcy cases. However, the District of Nebraska has two court locations for the convenience of Nebraskans.
The Lincoln bankruptcy court is located in the United States Courthouse at 100 Centennial Mall North in Lincoln, NE. However, the mailing address is the courthouse in Omaha. The Omaha bankruptcy court is located in the United States Courthouse at 111 South 18th Plaza in Omaha, NE.
Chapter 13 Trustee for Nebraska
There is only one Chapter 13 trustee for the District of Nebraska. The office of the Chapter 13 trustee, Kathleen A. Laughlin, is located in Omaha, NE.
The Chapter 13 trustee assigned to your case oversees the bankruptcy estate. The trustee conducts the 341 First Meeting of Creditors and reviews your bankruptcy forms and proposed Chapter 13 plan. You mail your payments to the trustee, or the plan payments are deducted from your paycheck.
The Chapter 13 trustee pays your creditors according to the terms in your confirmed bankruptcy plan. The trustee assigned to your case may require you to submit copies of tax returns or other information during your case.
Alternatives to Filing Bankruptcy in Nebraska
Filing a Chapter 13 bankruptcy in Nebraska may be the best way for you to get out of debt. However, there are alternatives to filing bankruptcy that you may want to research before deciding to file a Chapter 13 case.
Our Debt Settlement Guide explains how individuals can negotiate with their creditors to settle debts for less than they owe to the creditors. However, there are some disadvantages of settling debts, such as reporting the forgiven debt as income on your tax return. Forgiven debt in a Chapter 13 case is not considered income.
You may also want to read our Debt Management vs. Debt Settlement guide the compares ways to get out of debt through debt management techniques, such as our Savvy Debt Payoff app. If debt consolidation interests you, then you can use our calculator to compare debt consolidation to debt settlement.
Should I Pursue A Chapter 13 Bankruptcy Case in Nebraska?
Choosing a debt-relief option can be complicated and confusing. If you have questions or want more information about our services, resources, and tools, contact Ascend by calling or texting us at 833-272-3631.