Frequently Asked Questions About Bankruptcy in Lincoln and Throughout Nebraska
Lentz Law’s Experienced Attorney Helps Clients Across Nebraska Achieve a Fresh Start
If you are considering filing for bankruptcy, you likely have more than a few questions. Bankruptcy can provide powerful financial relief, but it is not necessarily for everyone. Our Lincoln bankruptcy attorney can offer the guidance you need to determine whether bankruptcy is right for you.
When you come to Lentz Law, John will listen to your concerns, review the facts of your situation, and address any immediate concerns you may have. We are deeply familiar with the intricacies of the process and can answer all of your frequently asked questions about bankruptcy in Lincoln. We can clarify how filing works, the benefits it can facilitate, and the impact it may have on your financial situation. Our goal is to provide simple, understandable explanations that can help you make an informed decision about how to move forward.
What Type of Bankruptcy Should I File for in Nebraskaa?
Several types of bankruptcy are potentially available, but you will likely not qualify for all of them. If you are an individual, you will most likely need to file for either Chapter 7 bankruptcy or Chapter 13 bankruptcy. If you are a family farmer with regular income, Chapter 12 bankruptcy may be the best choice. Most businesses will need to file for Chapter 11 bankruptcy.
As an individual, you will need to complete the Nebraska Means Test to determine whether you can file for Chapter 7 or Chapter 13 bankruptcy. This involves comparing your current monthly income with the average median income for your household size in Nebraska. If your income is less than the applicable average, you automatically qualify for Chapter 7 bankruptcy. If your income exceeds the average, you will need to calculate your monthly disposable income by subtracting qualifying expenses. If you have little to no disposable income, you may still qualify for Chapter 7 bankruptcy. If you do have substantial disposable income, you may need to pursue Chapter 13 bankruptcy.
Will Bankruptcy Stop Creditor Harassment?
You do not necessarily have to file for bankruptcy to put a stop to the worst of creditor harassment. If you are being subject to endless threatening phone calls, you can exercise your rights under the federal Fair Debt Collection Practices Act (FDCPA) and ask creditors to stop contacting you. Note that this law outright prohibits many types of predatory or intrusive creditor conduct.
Though creditors are obligated to stop contacting you if you ask, they may choose to file collection lawsuits against you in response. If you legitimately owe a debt, they are likely to win and will eventually obtain a court judgment. This allows creditors to garnish your wages, meaning they will take a slice of your paycheck until the debt has been paid.
Filing for Chapter 7 or Chapter 13 bankruptcy immediately puts a stop to any imminent or ongoing collection actions, including creditor contact, collection lawsuits, and wage garnishments. If a creditor is in the process of suing you when you file, the legal action must cease until the bankruptcy’s automatic stay is lifted. In many cases, the freeze on collection actions will remain in effect until your bankruptcy case is over.
In other words, when you file for bankruptcy, creditors will not be able to contact you or act against you. We can help you address your underlying debt and put a stop to all forms of creditor harassment.
What Types of Debt Can I Discharge through Bankruptcy?
Successfully completing a bankruptcy case generally allows you to discharge certain types of debt. However, you will not be able to eliminate all debts.
In many consumer bankruptcy cases, you can discharge unsecured debts, which include:
- Credit card debt
- Medical debt
- Personal loans
- Unpaid utility bills
You will also not be able to eliminate student loan debt or tax debt in most cases.
Keep in mind that Chapter 13 bankruptcy gives you the tools to catch up on all of your debts, including those that you cannot discharge. We can walk you through what debts you can expect to eliminate and work together to find the best approach.
Can Bankruptcy Save My Home in Nebraska?
If you have received a Notice of Default, you may be wondering if bankruptcy can protect your home from foreclosure. Chapter 13 bankruptcy will stop the foreclosure process so long as you file before the day the public auction is scheduled to take place.
When you file for Chapter 13 bankruptcy, you must propose a reorganization plan through which you will repay some of your debts over a period of 3 to 5 years. Missed mortgage payments are considered a “priority debt” and consequently must be paid before unsecured debts. In most cases, you will remain protected from foreclosure throughout your plan so long as you continue to make the required payments.
This can give you the flexibility you need to reorganize your finances and keep up with your mortgage going forward. We can develop a comprehensive strategy for addressing missed mortgage payments and protecting your home through bankruptcy.
Will Filing for Bankruptcy Damage My Credit?
There is no getting around it: Filing for any type of bankruptcy will harm your credit. If you are contemplating filing for bankruptcy, however, chances are that your credit is already not in good shape. If you do nothing, your credit could get even worse as your debts continue to mount.
Bankruptcy can be the start of a new beginning. Though a bankruptcy filing will remain on your credit report for several years, it is not permanent and will eventually go away. You can also take immediate steps to rebuild your credit once your case has concluded.
Is There Bankruptcy Relief Available for Small Businesses in Nebraska?
Chapter 11 bankruptcy is an inherently complex process in which a business must propose a reorganization plan that restructures its finances. Until fairly recently, businesses of all sizes had to go through the same Chapter 11 process.
Chapter 11, Subchapter V of the Bankruptcy Code allows qualifying small businesses to access expedited procedures. Subchapter V cases are generally less expensive and more efficient than a traditional Chapter 11 bankruptcy. Our team at Lentz Law can determine whether your company qualifies as a “small business” under Subchapter V and guide you through each stage of the filing.
If you have additional questions not listed above, do not hesitate to call 402-526-5540 or contact us online. We offer flexible payment plans and same-day appointments.