Filing Chapter 13 in Nebraska

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Consumers that would like to file for bankruptcy in Nebraska can file for either Chapter 7 or Chapter 13. Chapter 7 is also referred to as a liquidation bankruptcy because the bankruptcy trustee seizes the debtor’s non-exempt assets and sells them to raise funds to repay the debtor’s creditors. In contrast, Chapter 13 bankruptcy allows a debtor to retain possession of his assets while completing a repayment plan. In a Chapter 13 repayment plan, a debtor continues to pay off debts under an installment payment plan administered by the Chapter 13 bankruptcy trustee.   

Debtor’s Bankruptcy Eligibility

Both Chapter 7 and Chapter 13 bankruptcy have eligibility requirements that must be fulfilled before the bankruptcy court will allow the bankruptcy to proceed. For example, in Chapter 7 bankruptcy, the debtor must either make less income than the state’s median income or the debtor must satisfy the means test. The means test is a formula used to determine how much disposable income a debtor has remaining each month after paying the debtor’s necessary expenses. However, if the debtor has a certain amount of stable disposable income after paying for the basics, Chapter 13 may be the debtor’s only bankruptcy option.

To qualify for Chapter 13 bankruptcy the debtor must have regular and reliable income for at least six months prior to filing for bankruptcy. A debtor’s income can come from many different sources including alimony, a pension or disability benefits. In addition, to be eligible for filing Chapter 13 bankruptcy, the debtor must submit a repayment plan for approval by the bankruptcy court. Repayment plans last between three to five years.

With the help of a bankruptcy attorney, under Chapter 13 a debtor can prepare a repayment plan to make installment payments to creditors over whatever period the bankruptcy court allows within the five years. The bankruptcy court approves the repayment plan at the debtor's confirmation hearing. The debtor’s creditors may attend the confirmation hearing and have the right to object to any portion of the plan. If the bankruptcy court approves the repayment plan, the debtor begins making payments immediately to the Chapter 13 bankruptcy trustee.

Chapter 13 Repayment Plan and Discharge

The debtor makes all payments directly to the bankruptcy trustee, who then distributes the payments to the debtor’s creditors. As stated above, filing Chapter 13 reorganizes the debtor’s debts. Under the plan, the debtor makes partial or full payments and the remaining debts are discharged at plan completion. However, if the debtor misses payments or makes payments for less than the full amount, the debtor may risk having the bankruptcy case dismissed. If the debtor completes the plan, the court will grant a bankruptcy discharge.

Getting Legal Help

If you are thinking about filing Chapter 13 bankruptcy in Nebraska, contact an experienced bankruptcy attorney. An attorney will evaluate your financial situation and help you decide whether filing Chapter 13 is right for you.

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