Bankruptcy is not the right choice for everyone. In fact bankruptcy
should only be used as a last resort to financial problems. Because
bankruptcy has been abused in the past, the United States has set up
new bankruptcy laws as of 2005. These new laws that began in October of
that year have set limits on who can qualify for bankruptcy and which
bankruptcy is appropriate for each individual. The 2005 Bankruptcy Act
also increased the monthly payments for Chapter Thirteen bankruptcy and
set new stipulations on who can apply for Chapter Seven bankruptcy.
These new laws make petitioning for bankruptcy a difficult process. In
the past individuals could simply file the necessary forms through an
online do-it-yourself database. But now that new applications,
different details are required, and as each case is on an individual
basis, bankruptcy can be a long and drawn out process. Bankruptcy
depends on an individual's current income, his or her household status,
the amount of outstanding debt, and personal expenses.
Petitioning for Bankruptcy
It is advisable to consult a bankruptcy attorney prior to petitioning
for bankruptcy. Attorneys will be able to help gather the necessary
paperwork and be able to file all the paperwork correctly. He or she
will also be able to determine which kind of bankruptcy is available
for each case. The paperwork that is necessary includes tax refunds for
the past two years, any large purchases in the past six months, income
statements, motor vehicle titles, real estate information, and others.
Using do-it-yourself systems can eliminate the middleman, but if any
information is filed incorrectly, the case will be thrown out. If the
court finds that any information in the bankruptcy documents have been
purposely falsely filed, the case will also be thrown out.
Different Kinds of Bankruptcy
Nebraska has two different kind of bankruptcy for consumers: Chapter
Seven bankruptcy and Chapter Thirteen bankruptcy. Chapter Seven
bankruptcy is for individuals who cannot pay off their creditors with
their current income. In these cases a trustee will be assigned through
the court. He or she will then liquidate non-exempt property.
The funds acquired will then be used for paying creditors. This kind of
bankruptcy is for the most serious cases and not for those who can pay
more than one hundred dollars a month on their debts. Chapter Seven
bankruptcy can be completed in six months or as few as three months,
depending on the outstanding debts. Some kinds of property are deemed
exempt from liquidation and are charted by categories and values.
Chapter Thirteen bankruptcy is the other form of bankruptcy available
in Nebraska. Chapter Thirteen bankruptcy uses an individual's current
income to pay creditors. After bankruptcy has been approved a payment
plan will be set up for the individual's personal needs. This plan will
include designated amounts for each month's payment that can last no
more than five years and usually no less than three years. This
repayment plan however does not completely eliminate a credit history.
Any information will stay on an individual's credit report up to ten
years after bankruptcy completion.