Each year, millions of Americans file for bankruptcy, many of them being Nebraska homeowners. Knowing what to expect and the process before filing for bankruptcy can help you make an informed decision.
In this blog post, we will discuss the steps to filing for bankruptcy in Nebraska, as well as the types of bankruptcy you can file for. Considering bankruptcy due to overwhelming debt? Read on!
What Is Bankruptcy?
Bankruptcy allows you to pay down some of your debts over time or eliminate others entirely. In either case, declaring bankruptcy grants you an automatic stay, which prevents your creditors from trying to collect your debts.
Reasons to Consider Filing for Bankruptcy
There are many reasons why you might think to declare bankruptcy. In many cases, bankruptcy results from falling behind on debt, struggling to repay loans, or using credit cards excessively.
Other reasons to consider bankruptcy may be:
- Being harassed by creditors
- Getting threatened with foreclosure on your home
- Having a hard time making your debt payments
In any of these situations, you should seek the advice of a bankruptcy attorney.
Alternatives to Bankruptcy
Making the decision to file for bankruptcy is not an easy one. Before making any major decision, it is important to know your options.
Credit counseling and debt settlement are good alternatives to bankruptcy. Nevertheless, consulting a financial advisor before making any major decisions is always advisable.
By consolidating your debts, you can save on interest costs and repay them faster. Last but not least, it is always worthwhile to negotiate with creditors. A successful agreement can prevent bankruptcy, despite the complexity of the process.
The Types of Bankruptcy for Individuals
There are two types of bankruptcy that individuals can file in Nebraska: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy, sometimes known as liquidation bankruptcy, allows you to discharge or get rid of certain types of debt. Since the process is cheap and can be completed quickly since creditors don’t get paid, this is usually the first option considered. However, this type of bankruptcy is mainly suitable for people with few assets as people with more assets can risk losing them when filing. Furthermore, if you are delinquent on your mortgage or car payment when you file, you may lose them since there are no payment plans for catching up.
Conversely, Chapter 13 debtors have the chance to repay their debts within three to five years. Unlike Chapter 7 bankruptcy, Chapter 13 allows you to keep all your property while avoiding foreclosure and repossession. It is also possible to force a creditor to accept a payment plan if the debt cannot be discharged in bankruptcy.
How to File for Bankruptcy in Nebraska
If you are considering filing for bankruptcy in Nebraska, it’s important to know the steps involved. The steps to take have been detailed below.
- Gather Your Nebraska Bankruptcy Documents: This includes copies of your tax returns for the past two years and your last 60 paycheck stubs.
- Sign Up for a Credit Counseling Course: Find course information here.
- Fill Out the Bankruptcy Forms: You can download the forms free through USCOURTS.gov.
- Pay the Filing Fee: You must pay $338 to file for bankruptcy under Chapter 7. If you earn less than 150% of the poverty guidelines and cannot afford the filing fee, you can request a fee waiver.
- Print the Bankruptcy Forms: Use black ink to print all forms on white, 8.5″ x 11″ paper.
- File the Forms With the Nebraska Bankruptcy Court: The Nebraska Bankruptcy Court is located in Omaha. There is limited access to the court for questions, but you can call in if you need assistance.
- Mail Documents to Your Trustee: After filing for bankruptcy, you will be assigned a trustee.
- Take Another Course: Take a debtor education course within 60 days after the 341 meeting.
- Attend Your 341 Meeting: Your creditors will attend this meeting and ask questions.
What Happens Post-Bankruptcy?
In bankruptcy, most unsecured debts are forgiven, so you won’t have to pay them back. There are, however, certain types of debt that cannot be forgiven through bankruptcy, including student loans, child support, and alimony. A bankruptcy filing may also result in the forfeiture of some belongings.
Does Bankruptcy Impact Your Credit?
Depending on the type of bankruptcy you file, your credit score will be affected for seven to ten years. Therefore, you may have difficulty getting a loan or credit line in the future.
Rebuilding Your Credit Score Post Bankruptcy
Bankruptcy is not a financial death sentence, despite what many people believe. You can rebuild your credit by:
- Making on-time payments.
- Maintaining a good payment history.
- Getting a secured credit card.
- Becoming an authorized credit card user.
- Applying for a small loan.
- Reviewing your credit report for errors often.
Sell Your House and Avoid Bankruptcy in Nebraska
Having to consider bankruptcy is never something anyone hopes to do, but if it happens, we can help! When you sell your house fast for cash in Nebraska, you’ll save your credit score from the damage that comes with bankruptcy.
At Favor Home Solutions, we buy houses as-is to make the process as easy as possible for you. Our team will work within your preferred timeline throughout the process to ensure you feel supported and at ease. We want to help you avoid bankruptcy and move on to the next chapter of your life as quickly as possible by making a fair cash offer for your house. Contact us today!