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One of the most common reasons people delay filing for bankruptcy is the fear of losing everything. That fear is understandable, but it's also one of the most persistent myths about the bankruptcy process. Nebraska law provides a set of protections called exemptions that shield certain property from creditors, and most people who file find that they can keep far more than they expected. Understanding what those exemptions cover is one of the most important steps toward making a clear-eyed decision about your financial options.
Worried about what you might lose if you file for bankruptcy? You deserve straightforward answers, not more uncertainty. Reach out to Lentz Law, PC, LLO through our online contact form or call us at (402) 526-5540. We can walk you through what Nebraska law protects and help you understand what filing could realistically mean for your situation.
What Are Bankruptcy Exemptions?
An exemption is a legal protection that lets you keep certain property even after you file for bankruptcy. Think of it as a shield: creditors cannot take the assets that fall within these protected categories.
Nebraska requires bankruptcy filers to use the state's own exemptions rather than the federal set. That means the specific dollar amounts and categories that apply to your case are determined by Nebraska law. Exemptions vary depending on your filing status and the type of property involved, which is one reason working with an attorney makes such a significant difference in maximizing what you can protect.
The amounts below reflect Nebraska law at the time of publication and are subject to change. Always confirm current figures with a qualified attorney before making any decisions based on them.
Your Home
Nebraska's homestead exemption allows eligible filers to protect up to $60,000 in home equity from creditors. Equity is the value of your home minus what you still owe on the mortgage. If you owe $200,000 on a home worth $240,000, for example, your equity is $40,000 — well within the protected amount.
The homestead exemption applies to your primary residence and the land it sits on, up to two lots in a city or village, or up to 160 acres outside an incorporated area. If you sell your home, the proceeds are also protected up to the exemption amount for up to six months after the sale.
For homeowners facing the possibility of losing their home entirely, it's worth knowing that Chapter 13 bankruptcy can also be a tool for catching up on missed mortgage payments over time while keeping the home, separate from the homestead exemption question.
Your Vehicle
Nebraska law protects equity in one motor vehicle per debtor, up to a specified limit set by state statutes. This protection applies whether the vehicle is used for commuting, personal use, or business purposes.
Many people assume they will automatically lose their car in bankruptcy, but that's often not the case. If the equity in your vehicle falls within the protected amount, you may be able to keep it. If you're still making payments on the vehicle and wish to keep it, you may also have options to reaffirm the loan, which means continuing to pay it as agreed outside of the bankruptcy discharge.
Your Retirement Accounts
This is one of the most significant protections available to Nebraska filers, and one of the least understood. IRAs, Roth IRAs, 401(k)s, 403(b)s, and most other tax-qualified retirement accounts receive strong protection under Nebraska law and federal bankruptcy law.
For most people, this means their retirement savings remain intact through the bankruptcy process. The law recognizes that wiping out someone's future financial security in order to satisfy current debts would be counterproductive, and the exemptions reflect that principle.
If protecting your retirement savings while addressing overwhelming debt is a priority, this is one of the areas where bankruptcy law often works in your favor in ways people don't anticipate.
Your Wages
Nebraska law protects a substantial portion of earned but unpaid wages from creditors. For the head of a household, up to 85% of unpaid wages may be exempt. For other filers, the protection is generally 75% of disposable earnings, or an amount equal to 30 times the federal minimum wage per week, whichever is greater.
This matters particularly for people facing wage garnishment. Filing for bankruptcy triggers an automatic stay, which immediately halts most collection actions, including garnishments. The wage exemptions also establish how much of your future earnings creditors can access even after the bankruptcy concludes.
Tools of Your Trade
If you use specific tools, equipment, or implements to earn a living, Nebraska law allows you to protect them up to a set dollar limit. This exemption is designed to ensure that bankruptcy doesn't strip people of the means to continue working and rebuilding financially.
For tradespeople, medical professionals, contractors, hairdressers, mechanics, and many others whose work depends on specific equipment, this exemption can be meaningful. The exact amount and what qualifies can depend on how the tools are categorized, which is another reason having legal guidance helps.
Household Goods, Clothing, and Personal Property
Nebraska exempts household furnishings, appliances, personal computers, books, and musical instruments held primarily for personal, family, or household use. Necessary clothing is also protected, as are medical supplies and equipment.
These exemptions mean that the practical contents of your home — your furniture, your family's clothing, your everyday appliances — are generally not at risk in a bankruptcy filing. Creditors are not going to show up and take your couch. The bankruptcy process is about addressing debt, not stripping people of the basic necessities of daily life.
Life Insurance
Certain life insurance benefits and proceeds receive protection under Nebraska law. Proceeds, cash values, and other benefits from life insurance policies not payable to the insured's estate are generally exempt, with some conditions related to how long the policy has been established.
If you have a whole life policy with cash value, or if you're a beneficiary of a life insurance payout, this protection may apply to your situation. The specifics depend on the type of policy and the circumstances, so this is worth discussing with an attorney if life insurance is part of your financial picture.
Public Benefits and Government Assistance
Certain forms of government assistance are protected in Nebraska bankruptcy, including unemployment compensation, workers' compensation benefits, Social Security benefits, and general public assistance. These protections exist to ensure that people in financial difficulty don't lose the safety net they depend on while working through the bankruptcy process.
A Wildcard Exemption for Anything Else
Nebraska also provides a wildcard exemption that allows filers to protect a set amount of any personal property of their choosing, beyond the specific categories listed above. This flexibility can be useful for protecting assets that don't fit neatly into other categories.
The wildcard can be applied to a wide range of properties and gives filers some control over prioritizing what matters most to them within the framework of available protections.
Chapter 7 vs. Chapter 13: How Exemptions Apply
The type of bankruptcy you file affects how exemptions work in practice. In Chapter 7 bankruptcy, a trustee reviews your assets and the applicable exemptions. Property that is fully covered by exemptions is protected; property that exceeds exemption limits may be liquidated to pay creditors. Most Chapter 7 cases are "no asset" cases, meaning everything the filer owns falls within the exemptions and nothing is taken.
In Chapter 13, exemptions play a different role. Rather than liquidating assets, Chapter 13 involves a repayment plan that lasts three to five years. Exemptions help determine the minimum amount unsecured creditors must receive through the plan. Many people choose Chapter 13 specifically to keep assets that might otherwise be at risk, while restructuring their debt into manageable payments.
Understanding which chapter makes more sense for your situation is one of the core questions a bankruptcy attorney helps you work through.
Don't Let Fear of Losing Everything Keep You From Getting Help
The fear of losing your home, your car, your retirement savings, or the contents of your home is one of the most significant barriers to seeking relief when you need it most. Nebraska's exemption laws exist precisely to prevent that outcome for most filers.
The right questions to ask are not "will I lose everything?" but "what does my specific situation look like under Nebraska law?" Those questions have specific answers, and getting them requires a conversation with someone who knows the law and understands your circumstances.
If you're also facing the possibility of foreclosure, it's worth knowing that bankruptcy may provide options there as well. The intersection of bankruptcy and foreclosure is an area where timing and strategy can significantly affect outcomes.
Take the Next Step With Lentz Law, PC, LLO
Bankruptcy is not about losing what you have. For many Nebraska residents, it's about protecting what matters most while getting out from under unmanageable debt. Lentz Law, PC, LLO works with individuals and families throughout Omaha and Nebraska to understand their options and make informed decisions about their financial future.
Reach out through our contact form or call us at (402) 526-5540. We'll listen to your situation, explain what the law provides, and help you figure out the path forward that makes the most sense for you.
This content is for general informational purposes only and does not constitute legal advice. Exemption amounts are subject to change and vary based on individual circumstances. Consult a qualified attorney to understand how Nebraska bankruptcy law applies to your specific situation.