Chapter 13 Bankruptcy Nebraska
Chapter 13 Bankruptcy provides debt relief to a Nebraska debtor by requiring the debtor to pay a portion of his debts back through a monthly repayment plan spanning a period of 36 to 60 months. This is how it got its nickname as the “wage earner’s bankruptcy”.
Chapter 13 Bankruptcy is especially beneficial for those Nebraska individuals who are slightly behind on their mortgage payment, car payment, owe back taxes or back child support. The repayment plan allows repayment on these arrears, sometimes at little or no interest.
There are some significant benefits to filing a Chapter 13 Bankruptcy and should be discussed with your Nebraska Bankruptcy Attorney.
Depending on the value of your home, your Nebraska Bankruptcy Attorney may be able to strip or cancel a second or third mortgage on your home.
If you have owned your vehicle for more than 910 days, your Nebraska Bankruptcy Lawyer may be able to have you pay the value of the vehicle rather than the full loan amount.
General unsecured debts, such as credit card and medical bills, usually are paid a small percentage of what they are owed. A successful completion of your bankruptcy repayment plan will discharge debts similar to a Chapter 7 Bankruptcy.
Chapter 13 Bankruptcy is available to all individual or married debtors. If you do not qualify for Chapter 7 Bankruptcy because of the “means test“, you have assets that you do not want liquidated under a Chapter 7 Bankruptcy, or you are behind on a secured debt, then Chapter 13 Bankruptcy will provide you with the appropriate debt relief.
The amount you are required to pay each month is determined by several factors and tests.
The first requirement is that all secured property arrears, secured loans other than mortgage, child and spousal support arrears, and tax debts must be paid in full before the end of your payment plan.
The second requirement is determined by the “means test”. The “means test” is a calculation supplied by Congress to determine how much per month your regular unsecured creditors should be paid under the plan. You can review how the “means test” works here, but essentially it takes your monthly income and subtracts standard expenses established by the IRS. The leftover amount is what must be paid to unsecured creditors.
If the “means test” calculation determines that no amount of money is to be paid to general unsecured creditors under the plan, then the third requirement to establish your monthly payment is by taking your actual income and subtracting it from your actual monthly expenses, leaving a net income which is the monthly payment. If your net income is greater than what would be required under the “means test”, then the net income amount would be your monthly payment as opposed to the “means test” amount.
Whether your plan lasts 36 months or 60 months is dependent on your particular circumstances. Generally, however, if you fail the “means test”, meaning your income is greater than the average family of your size, then you will be required to have a 60 month plan.