Stimulus Funds - Omaha Bankruptcy

How to Use Your Stimulus Checks Wisely When Filing for Bankruptcy

Stimulus Funds - Omaha BankruptcyIf you’re filing for bankruptcy, a new round of stimulus checks may provide relief. Soon, many Omaha residents will receive sorely needed stimulus relief funds.

Across the United States, many people have lost their jobs because of the pandemic. Along with those jobs, they’ve lost their incomes. In this way, COVID 19 is placing many families at risk.

In a short time, creditors will most likely resume collecting past debts and judgments. When they do, they could take consumer stimulus payments at the worst time possible.

To learn how to leverage your stimulus checks wisely while filing for bankruptcy, keep reading.

Protecting Your Stimulus Funds

In the coming weeks, many Omaha residents look forward to stimulus payments that will help them with necessities such as food and rent. The second round of stimulus checks is expected to start hitting consumer bank accounts as soon as next week.

On December 21, Congress finally agreed to a new $900 billion economic relief package. However, President Trump wants the stimulus check amount raised to $2,000, versus the approved $600.

For this reason, the stimulus funding date and amount are in question. Either way, you need to know what to do with the funds once they arrive.

In most instances, consumers will receive the payments directly in their bank accounts. Those payments will affect either 2019 or 2020 tax returns and income statements.

Except for child support, Congress has protected stimulus payments from federal debt. However, they did not protect consumers from the debt owed to other creditors.

For this reason, many Omaha residents face losing their stimulus checks before they can put them to good use. Creditors could take those funds to pay old debts instead of allowing consumers to meet their current needs.

Nebraska law protects residents from this scenario. However, amid the complex bankruptcy process, Omaha residents may still face wage garnishment and bank account freezes.

Creditors take these kinds of actions quickly. Most often, people don’t notice that they don’t have access to their funds until they need them.

Securing Your Immediate Future

If you’re facing a wage garnishment or execution, creditors could take your stimulus funds. A bankruptcy proceeding can help you to prevent this from happening.

Meanwhile, you’ll need to figure out what to do with your stimulus funds once you receive them. For many, the choices are painfully clear.

People need their stimulus funds to use as intended. Some struggling individuals sorely need their funds to purchase necessities for their families.

If you’re still employed, however, you might wonder how to use your stimulus funds. It’s helpful to use those funds to pay down debts.

Alternatively, you can put the money away for a rainy day. For example, you can save it to cover your rent, mortgage, or utilities in case of an emergency. In these uncertain times, it most certainly helps to build a nest egg if possible.

If society doesn’t find relief from the coronavirus soon, the job landscape is even more uncertain. If you’re still employed, it’s a good idea to start building reserve funds in case things change.

An Alternative Plan of Action for Stimulus Checks

Alternatively, you may have already filed for bankruptcy in light of recent events. If so, you may want to pay down debt that you don’t plan to charge off in your bankruptcy.

For example, paying off a credit card is a great way to access an immediate return on your stimulus funds. At the same time, you’re not risking co-mingling your stimulus funds with earned money, which can get frozen during bankruptcy.

However, you may want to hold off on paying student loan debt. Lawmakers are still deciding what to do about student-debt relief.

For now, the student loan debt collection process is on hold for approximately six months. Lenders are also waving interest fees during this hiatus.

If you don’t use your stimulus funds for immediate needs, paying down debt outside of your bankruptcy is your best option. You’ll especially want to pay down cards with interest rates above 8%.

Nearly a quarter of the workforce is unemployed due to COVID 19. If they haven’t filed for bankruptcy already, many individuals are considering doing so.

Some people worry that stimulus funds will put them over the threshold for bankruptcy. However, there’s no need to worry about this outcome. Fortunately, Congress added a section to the stimulus bill where these funds cannot count toward your income.

Getting Help With Your Bankruptcy

Some families need to file for bankruptcy to put a halt to foreclosure. If you choose to file for bankruptcy, the courts can provide an Order for Relief as soon as you file.

An automatic stay stops creditors and banks from collecting on debts. If your home is already headed to auction, the order can postpone the sale until you finalize bankruptcy.

An Order for Relief can delay the foreclosure process by three to four months. However, a persistent bank might persuade the courts to make the stay shorter.

The bankruptcy process can prove complex. What’s more, bankruptcy laws are currently in the midst of change. For this reason, it’s vital to have an experienced attorney on your side who can guide you through the process.

Experienced Omaha Bankruptcy Attorneys

Now you know more about collecting stimulus checks while in bankruptcy. If you’re facing foreclosure, however, you’ll need a skilled attorney who can protect your interests.

Burke Smith Law can help you find relief from financial stress that can wreak havoc on your life. The faster you resolve your financial issues, the sooner you can get your life back on track.

Our attorneys will work with you through all aspects of your case. You can rest assured that we’ll handle your case directly and not place it in the hands of a paralegal.

Contact Burke Smith Law today at 402-718-8865 or connect with us online. We’re here to help you through the complex bankruptcy process.

How Often Can You File for Bankruptcy?

How Often Can You File for Bankruptcy Omaha NE Bankruptcy AttorneyIf you filed bankruptcy in the past, how soon before you can file again? And how often can you file for bankruptcy and receive a discharge?

While you can file bankruptcy as many times as you want, waiting periods will depend on what type of bankruptcy you filed previously, the timing of it, and how the case ended.

What If You Need to File Bankruptcy Again?

In filing for bankruptcy, the goal most people have in mind is to have their debts eliminated. Your debts get discharged at a discount, after you pay your creditors a portion. You sell nonexempt assets in a Chapter 7 bankruptcy or complete a repayment plan in a Chapter 13 bankruptcy.

But just as you didn’t plan on needing bankruptcy before, unexpected crises can strike at any time — and you could easily find yourself deep in debt again. Health problems, unemployment, divorce, or business failures could cause you to fall behind on your bills. Bankruptcy is still option, but you may need to wait to file and have your debts discharged.

What Factors Limit the Timing of Multiple Bankruptcy Filings?

How soon you can file bankruptcy after your debts are discharged in bankruptcy depends on two factors.

Did You File for Chapter 7 or Chapter 13 Bankruptcy?

Federal law sets the timing between a bankruptcy discharge and a subsequent bankruptcy filing. This timing is based on the type of bankruptcy for which you received a discharge and the type you now wish to file.

You will wait the longest if you file Chapter 7 bankruptcy following a Chapter 7 or 13 discharge. You must wait eight years if your debts were discharged under Chapter 7 and you file for Chapter 7 again. A gap of eight years must exist between the day your debts were discharged and the day you file again.

You must wait six years if you received a Chapter 13 discharge and want to file for Chapter 7. The gap of time between a Chapter 13 discharge and filing Chapter 7 must be a minimum of six years. You won’t need to wait six years if you paid the unsecured debts associated with your Chapter 13 repayment plan. The same applies if you paid 70% of your unsecured debts made your best effort to abide by the plan.

You won’t need to wait as long if you seek a Chapter 13 bankruptcy after receiving a bankruptcy discharge. You must wait four years between the day you received a Chapter 7 discharge and then file for Chapter 13. The wait is two years if you filed Chapter 13 and want to file for Chapter 13 again. Because Chapter 13 repayment plans last three or five years before discharge, you can file Chapter 13 again immediately after discharge. If you complete payments under your repayment plan before the three or five years, you can immediately refile another Chapter 13.

Did Your Previous Bankruptcy End in Dismissal?

How soon you can file for bankruptcy again is also limited by whether your prior bankruptcy ended in dismissal. If your previous bankruptcy was dismissed with prejudice, you’ll need to wait at least 180 days before you file again. Your case will be dismissed with prejudice if you don’t obey court orders, delay your case, or file multiple times.

If your prior bankruptcy was dismissed without prejudice, you might be able to immediately file for Chapter 7 or 13. It will not matter what Chapter bankruptcy you filed earlier.

A prior dismissal in a bankruptcy case will also result in a shorter automatic stay period. When you file bankruptcy, you receive an automatic stay that stops creditors from collecting against you for a period of time. If you file bankruptcy within one year of dismissal, the automatic stay associated with your new bankruptcy will only be 30 days. If two or more of your bankruptcy cases are dismissed within a year of filing, you will not receive an automatic stay.

How Often Can You File Bankruptcy? Ask an Omaha Bankruptcy Attorney

If you are considering filing for bankruptcy again, an experienced Omaha bankruptcy attorney can help. At Burke Smith Law, we can help you assess your situation and understand your options. Contact us today to learn more.

Can You File Bankruptcy on Student Loans?

Can You File Bankruptcy on Student LoansTo get back on the path to financial relief, can you file bankruptcy on student loans? The answer is straightforward, but the process is not. This post will explore what you need to know as you consider your bankruptcy options.

If you are having financial difficulty, the Omaha bankruptcy attorneys at Burke Smith Law can help you. Contact us today to learn how we can help set you on the path to financial freedom.

Why File Bankruptcy?

Financial stress can be debilitating. If you are behind on your student loan payments, you may be considering filing bankruptcy.

The good news is that federal law gives you the right to declare bankruptcy and get relief from your creditors. The bad news is that it comes at the expense of your credit and is a long process.

But the fact is, bankruptcy gives you the chance to wipe your financial slate clean. It’s the right choice if you are looking for a start fresh.

What Happens to Student Loans in Bankruptcy?

So, can you file for bankruptcy to wipe out student loans? Yes, but only if you can prove “undue hardship.” To do this, you will need to make a compelling case that you cannot repay your student loans.

Courts will decide whether you can discharge your student loan debt in bankruptcy using a legal standard. Most courts will use the “Brunner Test” to evaluate hardship. Under it, your student loan debt will be forgiven if you can prove three things:

  • Poverty – You couldn’t maintain a basic standard of living with your current income and expenses if you continued repaying your loan.
  • Persistence – Your current financial hardship will likely last for the majority of the repayment period.
  • Good faith – You sincerely attempted to repay your student loans in the past.

Some courts use other tests as well. The totality of the circumstances test looks at all relevant facts in your case to determine undue hardship. A special test for Health Education Assistance Loans (HEAL) requires you to prove two things: (1) that your loan became due more than seven years ago; and (2) repayment will be an “unconscionable” burden on you.

Even if you are successful in proving hardship, the judge could decide to have only a portion of your loan forgiven. If not discharged, you could end up with a restructured loan where you repay under new and easier terms.

You have a better chance of having your student loan discharged if your loan is from a for-profit vocational or trade school. You will have to argue that there was a breach of contract. Or you could convince the judge that the school’s practices were deceiving, unfair or fraudulent.

Consider Other Options First

Because of the difficulty in getting student loans discharged in bankruptcy, you should first consider alternate repayment and forgiveness options.

Bankruptcy should be the last resort for you to resolve your debt issues. There are other solutions that could help relieve your student loan debt.

You should talk to your lender about any hardship programs it may have. Also, look into programs like income-driven repayment plans, deferment or forbearance. Under the Public Service Loan Forgiveness (PSLF) program, you could work for a government agency or non-profit and have your loan forgiven.

The Process for Discharging Student Loan Debt in Bankruptcy

If you want to discharge your student loan debt in bankruptcy, you will need to take three steps:

  • Hire an experienced bankruptcy attorney – You could represent yourself through bankruptcy proceedings. But, making a case for discharging student loans in bankruptcy is more complicated.
  • File bankruptcy – Your lawyer will help you decide whether you should file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is a shorter process that eliminates all unsecured debt. Chapter 13 restructures your debt so that a portion of it is repaid through a plan that could last up to five years.
  • File an adversary proceeding – Next, your attorney will have to file an “adversary proceeding.” You will present evidence and prove to the court that payment of your loans will cause an undue hardship. This lets the bankruptcy court determine whether your loan could be discharged.

What If Your Student Loans Aren’t Discharged?

In most cases, student loans are not discharged in bankruptcy. When this happens in a Chapter 7 bankruptcy, you will still have to make payments after you complete bankruptcy proceedings. After a Chapter 13 bankruptcy, you could have reduced payments as a part of your repayment plan.

Contact an Omaha Bankruptcy Attorney Today

If are thinking of filing bankruptcy on student loan debt, an experienced local bankruptcy attorney can help. Hiring an effective attorney can secure your financial future. At Burke Smith Law, we can help you determine whether filing is a good option for you. Our Omaha, Nebraska bankruptcy lawyers pride themselves on the high level of service provided to all of our clients.

Can Bankruptcy Stop Foreclosure?

Can Bankruptcy Stop ForeclosureIf you are behind on your mortgage payments, you may be considering filing for bankruptcy. But can bankruptcy stop foreclosure? The answer is yes. In most cases, you can avoid or delay the bank’s foreclosure of your home by filing for bankruptcy.

The Omaha bankruptcy attorneys at Burke Smith Law can help you protect your home. Contact us today to learn how we can help set you on the path to financial freedom.

Are You Facing Foreclosure?

If you’ve fallen months behind on your mortgage payments, your bank might initiate the foreclosure process. Most banks will not be willing to work out an alternate arrangement such a short sale or loan modification with you. They will seek to repossess your home and sell it at auction. The auction proceeds are then used to repay the mortgage and any legal expenses.

The foreclosure process is a long one. Typically, banks will not begin foreclosure until after you’ve missed more than three or four payments. This gives you time to think about loan forbearance, short sale, or deed in lieu of foreclosure.

But if these alternatives won’t work for you, you should think about bankruptcy. Filing for Chapter 7 bankruptcy can delay foreclosure for a few months. Filing for Chapter 13 bankruptcy can help you avoid foreclosure altogether.

How Do You Delay Foreclosure?

The court will automatically issue an Order for Relief when you file for bankruptcy. The order includes an “automatic stay” that tells your bank and other creditors to stop collecting on your debts.

If the bank already scheduled an auction of your home, the order will postpone the sale until your bankruptcy is finalized. This delay can last three to four months, unless the bank is successful in persuading the court to lift the automatic stay. If so, you will still have a delay of at least two months.

The three or four month delay will also be shortened if your bank files a foreclosure notice before you file for bankruptcy. In this case, an automatic stay you might be granted will not stop the clock on the foreclosure and auction of your home.

How Can Chapter 13 Bankruptcy Help?

If you want to keep your home but find yourself behind on your mortgage payments with no possible means of making up what you owe the bank, you should file for Chapter 13 bankruptcy. This way, you will be allowed to pay off the late unpaid payments over a period you propose in a Chapter 13 repayment plan.

Chapter 13 bankruptcy is only feasible if you have enough money to pay both your past due balance as well as your current mortgage payments at the same time. It is also useful to get rid of payments on second or third mortgages. This is possible if your home has dropped in value since you bought it and your equity is only enough to secure your first mortgage.

How Can Chapter 7 Bankruptcy Help?

Chapter 7 bankruptcy can help you by forgiving any debt you have that is secured by your home, including mortgages. However, it does not lift the foreclosure action that the bank has taken against you. So, you could still lose your home. You could also lose other valuable possessions that can be sold to make your bank whole again from their loss.

In addition, Chapter 7 bankruptcy is limited to those whose average gross income for the six-month period before the bankruptcy filing does not exceed the state median income for the same sized household. It is not an option for you if your income is enough to pay for your living expenses and a reasonable Chapter 13 repayment plan.

Why Should You Consider Bankruptcy?

If the bank proceeds with foreclosure and you do not file for bankruptcy, you will not only damage your credit but will also have to keep making mortgage payments. Filing for bankruptcy gives you the option of a fresh start. It does temporarily damage your credit score. But it also gives you a chance to rebuild your credit, save money, and get back on your feet sooner.

Contact an Omaha Bankruptcy Attorney Today

If you are facing foreclosure, talk to an experienced bankruptcy attorney. We can help you determine whether filing is a good option for you. Burke Smith Law can help you secure your financial future and possibly keep your home.

Am I Responsible for My Spouse’s Debt?

Am I Responsible for My Spouse's Debt - Omaha Debt Relief LawyerAt some point, your circumstances may leave you wondering, “Am I responsible for my spouse’s debt?”

In Nebraska, you’re usually not responsible for debts that your spouse incurs, either during or before marriage. You especially don’t have to worry about debts they incurred before you married them.

But (and there is always a but), there’s one arcane legal theory where you will have to worry about your spouse’s debts. Even if everything else is covered, certain things may not be. Let’s take a look at what those things are.

If you have questions about your debts, contact Burke Smith Law to speak to an experienced Omaha debt relief lawyer.

What Is the “Doctrine of Necessities”?

In most states — including Nebraska — you may come up against the Doctrine of Necessities. This doctrine applies mostly to medical debts. Even if your spouse passes away, creditors will expect you to pay for any medical bills your spouse incurred before they passed. However, the necessities rule may also apply to basic necessities like rent, food, utilities, clothing, and any other items or services provided to help your spouse live a normal life. So if you have a spouse who runs up $1000 phone bill, you’re simply out of luck. In that case, the answer to the question of “Am I responsible for my spouse’s debts?” is “Yes, you are.”

Why Am I Responsible for My Spouse’s Debt, If It’s Only in the Name of My Spouse?

Unfortunately, the fact the debt is only in your spouse’s name doesn’t matter under the law. You’re responsible for the debts even if you didn’t sign for them. This is where the “in sickness and in health” part of most marital vowels receives the most strain. Worse, the rule stands even if you’re separated, and even if you never agree to or sanctioned a specific medical treatment. Because Nebraska is a state that recognizes common-law marriage, the Doctrine of Necessities applies even to common law spouses, especially if you’ve already taken on the responsibility of care for your spouse. The only way to avoid this is to have a court or the state legislature relieve you of the responsibility. There have actually been high-profile cases in which this has occurred.

The Doctrine of Necessities can, in some cases, add severe financial insults to injury, and it applies to all spouses, whether male or female. Some have argued that this places an undue burden upon the wives of men who died with high medical bills.

Is the Doctrine of Necessities Constitutional?

You might think this is an unfair law, and that the states at least would have stricken it down. In fact, we, both Alabama and Virginia have done so under the justification that the law is archaic and unfair to women, who tend to outlive their husbands by years. The Doctrine of Necessities can place an undue financial burden on these women for the rest of their natural lives.

While Nebraska still adheres to this concept, many jurists and lawmakers consider it old-fashioned, overly broad, and harmful. In time, some court will probably strike it down at the federal level, as has happened with many other such laws. However, that will require a challenge that goes all the way from local to state to federal courts.

What Happens If You Get a Divorce?

If you and spouse decide to get a divorce try not to leave the marriage with shared debt. Pay off any joint cards together. Or you can divide the debt and then transfer it to cards that are in each spouse’s name. Doing this will protect you if your ex-partner later decides to file bankruptcy or fails to pay what they owe. If you don’t have protections in place, creditors could go after you for the full debt amount.

Speak to an Omaha Debt Relief Lawyer

If you find yourself the “beneficiary” of a spouse’s debts, talk to a debt relief lawyer. At Burke Smith Law, we can help. Contact us for a free consultation.

Filing Bankruptcy While Married: Can I File Bankruptcy Without My Spouse?

filing bankruptcy while married, can I file bankruptcy without my spouseIf you’re planning to file bankruptcy, you may be wondering whether filing bankruptcy while married is a good idea. There are certain benefits to doing so jointly that will help you keep more of your property and dispense with more of your debt. But at the same time, the bankruptcy may negatively impact your spouse if you’re not careful.

At this point, you may be asking yourself, “Can I file bankruptcy without my spouse?” Yes, you can. But even in a common law property state like Nebraska, individual bankruptcy may still hurt your spouse. Let’s take a look at how the state treats your debts and properties when you’re filing bankruptcy while married.

What Is Community Property?

Nebraska is not a community property state — it’s a common law property state. So what’s the difference?

In community property states like California and Texas, most if not all of the property acquired during your marriage is officially owned by both spouses, no matter whose name is on the title. Therefore, all that property can become part of your bankruptcy, which can hurt your spouse financially if you don’t have enough bankruptcy exemptions to cover all your joint assets. In such a case, filing bankruptcy as a couple is preferable to individually filing bankruptcy while married, and this is what almost always happens.

What Is Common Law Property?

However, in common law property states like Nebraska, the rules of equitable distribution determine what properties belong to who, very like the way most states divide assets after a divorce.

Basically, anything that you brought into the marriage, that was given or be quested to you, or that has your name as sole owner on the title is considered separate property: yours alone. That property applies toward the bankruptcy first. You both own half of any joint marital property (property acquired during your marriage in both your names), and the bankruptcy applies only to your half of an asset. This may mean, however, that you have to sell the asset to get the value in cash, an issue we’ll cover in a moment.

What Properties Go Toward Your Bankruptcy?

In Nebraska, the courts will take into account your separate property and your half of any common marital property when you are individually filing for bankruptcy while married. Your spouse’s property will not become part of the bankruptcy. But — and this is a big but — if you don’t have enough exemptions to cover all the properties you own half of, your Chapter 7 trustee can force you to sell those properties, despite them being half-owned by your spouse. Your spouse will lose the property but will get half the sale proceeds; your half will go toward paying your creditors.

The good news is that the trustee has to at least try to divide the property before selling it. This works best with land, which they can easily divide, or with properties that have multiple parts. The trustee must also demonstrate that selling the property will benefit both co-owners more than it hurts them.

In Chapter 13 filings, you’re unlikely to lose joint property, since this kind of bankruptcy generally involves settling up structured payments to catch up with the arrearage on your debts.

Your Discharged Debts

If you file individually, your bankruptcy will eliminate only your separate dischargeable debts and your half of your joint debts. Your spouse still has to take care of their half. If you’re the only spouse with financial woes, it makes sense for you to file individually, as long as you can cover joint properties with exemptions and avoid their forced sale. If, however, your spouse shares your debt issues, you’re better off jointly filing bankruptcy while married. That way, you’ll have more exemptions, and the dischargeable debts of both of you are eliminated. You may still have to sell joint properties that exemptions don’t cover, though.

If You Have Questions About Filing Bankruptcy While Married, Speak to an Experienced Bankruptcy Attorney

Bankruptcy law can be confusing in any state. And it’s often hard to tell whether you should file individually when married, or as a couple. For the best results, you need legal counsel. If you live in the Omaha area, call Burke Smith Law. We know you don’t want to hurt your spouse. We can help you figure out which option for filing bankruptcy while married works best for you.

Do I Get to Keep My Nebraska Tax Refund in Bankruptcy?

Nebraska tax refund, Nebraska Tax AttorneyEach year, right around April, Nebraska residents wonder how their Chapter 7 bankruptcy will affect their tax refund. Do you get to keep it, or does it go directly to your creditors?

The fact is that each year those who file taxes and simultaneously have a Chapter 7 bankruptcy pending lose their tax return to the bankruptcy trustee. This happens despite the fact that tax returns are considered protected assets under Nebraska law. In other words, this should very rarely happen.

The Omaha bankruptcy attorneys at Burke Smith Law can help debtors protect their Nebraska tax refund from creditors. Contact us today to learn how we can help set you on the path to financial freedom.

Nebraska Tax Refunds Are Considered Protected Assets

Those who have filed for Chapter 7 bankruptcy generally understand that their assets will be liquidated to the extent possible in order to pay off their creditors. Some assets, on the other hand, are protected from liquidation. In other words, the trustee may not go after certain kinds of assets when liquidating your estate.

Protected assets include your car, your home, and any assets that you own that help you with your work. In addition, Nebraska tax refunds are among the assets that you can claim as protected – but there is a limit to how much you can protect.

These laws are known as exemption laws. Two exemption statutes are relevant to Nebraska tax refunds. Those are:

The Wild Card Exemption allows a debtor to protect up to $2,500 of personal property. Tax refunds are considered personal property. Married couples filing together are entitled to keep $5,000 in personal property.

The Earned Income Credit exemption allows a debtor to keep the full sum of the earned income credit of their Federal and Nebraska tax refund. There is no dollar limit to this exemption.

I Lost My Nebraska Tax Refund to Chapter 7 Bankruptcy

Unfortunately, this happens too often. If your bankruptcy attorney neglected to conduct a full interview and simply filed your papers, there is nothing exempting a bankruptcy trustee from trying to take that money in order to satisfy your creditors.

While appointed by the court, the bankruptcy trustee is not a neutral party. His job is to liquidate as much of your estate as possible for the purpose of paying back your creditors. He actually gets a percentage of anything he can find to liquidate.

Your attorney’s job, on the other hand, is to protect you and your assets to the extent possible and ensure that your financial documents are ready for the court. Unfortunately, not all bankruptcy attorneys are made equally. Some simply do the bare minimum. In a case in which your Nebraska tax refund was liquidated by the trustee when it didn’t need to be, your bankruptcy attorney did not do their job effectively.

The trustee, on the other hand, did an excellent job. Once that money is gone it is gone for good. Giving it to your creditors when it was exempt did not do anything to put you in better standing financially. You still:

  • have a bankruptcy listed on your credit report for the next 10 years,
  • cannot file for a bankruptcy for another 7 years, and
  • have to make a concerted effort to rebuild your credit.

Your giving creditors money that you are entitled to exempt does literally nothing to make your situation better.

Am I Limited in What I Can Do With an Exempted Nebraska Tax Refund?

Not precisely. There are certain things that you should avoid. One of those things is paying back loans to family members or business partners. The folks are considered “insiders”. In other words, a trustee will be very suspicious of such a transaction and may have the power to reverse it.

Additionally, if you spend your tax refund on a new boat while simultaneously applying for bankruptcy, the trustee will look at your new boat as a liquidatable asset. In other words, while they can’t touch the money, you should be careful what you spend it on. You will have to explain what you spent the money on to the trustee.

Contact a Bankruptcy Attorney and Protect Your Nebraska Tax Refund From Creditors

Burke Smith Law specializes in helping Nebraska residents navigate bankruptcy. We can also help you protect your Nebraska tax refund. Give us a call and we will ensure that all your exempted assets are protected.

Can Debts Be Too Old to Collect? Nebraska Statute of Limitations on Debt

Nebraska statute of limitations on debtThe Nebraska statute of limitations on debt defines the window during which a creditor may sue a debtor to recover a debt.

In Nebraska, the statute of limitations on debt is 5 years from the last payment made. That means that creditors cannot sue you after that 5-year statute of limitations has run out. If the agreement was verbal, then that number is reduced to 4 years.

However, if the debt has lapsed for (let’s say) 3 years and you make a payment on it, then the date of last payment is reset. This means that the lender has another 5-year time period in which to sue.

Burke Smith Law helps Nebraska’s debtors regain control over their finances. If creditors are harassing you, give us a call at (402) 810-7032 and we can begin discussing your options.

I’m Being Harassed for Very Old Debts

The Nebraska statute of limitations on debt prohibits a creditor from suing you to recover that debt. It does not, on the other hand, prohibit them from trying to collect the debt.

Recently, it has become commonplace for companies to buy up debt that falls outside the statute of limitations and then harass or trick people into paying off these debts. In some situations, these creditors lack basic documentation proving that you owe the debt. In other words, they’ve purchased the right to harass you from a creditor who can no longer recover their debt.

Once you make a voluntary payment on the lapsed debt, it resets the Nebraska statute of limitations on debt enabling the creditor to sue you again. These folks are colloquially known as “debt scavengers” collecting on what is colloquially known as “zombie debt.”

It’s therefore quite important that you know what debts you owe, when the last time you paid was, and what the potential consequences are for paying or not paying an outstanding debt.

Debt Scavengers and Zombie Debt

In order to get people to pay on debt that has lapsed, isn’t theirs, or was discharged in bankruptcy, debt scavengers use a number of underhanded tactics. All of these are aimed at reviving the debt and resetting the statute of limitations.

Common tactics include:

  • Promising to leave you alone for a small payment,
  • Promising not to report the debt on your credit report for a small payment,
  • Suing you or threatening to sue (which is illegal),
  • Re-aging debt on your credit report (which is illegal),
  • Verbally abuse or consistently harass you (which is illegal),
  • Misrepresent themselves as a “litigation” firm (which is illegal).

Your best bet when dealing with firms such as this is to simply not speak to them, check your credit report, and if necessary, sue them.

I’m Being Sued for an Expired Debt

While it’s true that the Nebraska statute of limitations on debt prohibits creditors from suing debtors if the five-year period has lapsed, they have been known to try to anyway. This is because they are hoping the lawsuit scares you into compliance. On the other hand, this can be easily managed.

Assert Your Defense in Writing

You will want to file a written response with the court clerk asserting that the debt the creditor is trying to collect on has fallen outside the Nebraska statute of limitations on debt. You must explicitly claim this as a defense to the lawsuit.

Demand Documentation

The next thing that you’ll want to do is demand an account history for the debt in question. The debt collector is then obligated to produce documentation confirming that you have made a payment within the last five years. The documentation should show the date the payment was received, how much it was for, and in what manner the payment was made (bank transfer, check, cash, etc.).

If the debt collector cannot produce this information, then that should stop their lawsuit in its tracks.

You Can Counter-Sue

When the debt collector filed a lawsuit against you for an expired debt, they broke the law. The Fair Debt Collection Practices Act prohibits creditors from initiating a lawsuit on an expired debt. You could be entitled to $1000 in punitive damages and compensation for any attorneys fees.

Burke Smith Bankruptcy Attorney Can Help You Deal With Debt Collector Harassment

If you’re being harassed by creditors, know your rights. You do not have to pay on accounts that have lapsed beyond the Nebraska statute of limitations on debt. For more information, contact Burke Smith Law today.

How to Protect Your Bank Account From Garnishment

How to Protect Your Bank Account From GarnishmentIf you’re wondering how to protect your bank account, chances are a decision has made against you by a creditor. If a creditor obtains a judgment against you, they can garnish your bank account. That means they have obtained the right to dip into your savings and retrieve any money that’s owed them. It’s possible to wake up one day with your bank account completely cleaned out. Suddenly, you and your family are living check to check, trying to figure out what your next move will be. Luckily, a little bit of planning can help you protect yourself.

Burke Smith Law helps families protect their assets when creditors come calling. If you’re in a tight spot, give us a call at (402) 512-5490 and we can set you on a path that stabilizes your finances.

What to Do When a Creditor Tries to Garnish Your Bank Account

When a creditor garnishes your bank account, they are required to inform you that a judgment has been made against you. They don’t always, and we’ll get to that in a bit.

The Money Is Protected by Law or Does Not Belong to You

Once you know the judgment has been made against you, you can move to protect your money.

Firstly, when the creditor serves you with a garnishment summons, you receive a form that has three checkboxes. One of those is “objection”. This must be filed within 3 days of the receipt of the summons.

In some instances, the monies that the creditor wants to garnish cannot be garnished by law. Those include:

  • Social Security or disability benefits
  • Unemployment benefits
  • Money from an injury lawsuit
  • Veterans benefits
  • Retirement accounts
  • Child support payments
  • Workers’ comp payments
  • Life insurance payments

In addition, money that is held in an account that does not actually belong to you cannot be levied. For instance, if you’ve opened an account for a child who is using the account to deposit money, then you can provide the child’s paystubs at the hearing.

It bears noting that all the monies held in the account must be of a protected class.

Your Property Is Exempt Based on Its Total Value

You can claim that the money in your bank account is exempt based on the total value of your property. You will need a lawyer to represent you in order to make this claim. It’s a complex motion that requires a lot of paperwork.

Basically, you will claim that the garnishment will produce undue hardship.

Quashing a Bank Levy After the Fact

Some folks figure out how to protect their bank account the hard way. That is to say, after the judgment has been made against them. Legally, when a creditor moves to levy your bank account, they must serve you with papers to announce the judgment. This gives you 3 days to object or file for bankruptcy and stop the levy in its tracks.

Knowing this, unethical creditors fail to deliver notice of the judgment, or deliver it to an old address. This does not give the individual against whom the judgment has been filed time to react. They wake up one morning and all their money is simply gone.

This is known as a “gutter service” because the notice is simply ditched. It’s illegal, but it’s common because it forces the debtor into proving the negative argument “I never received notice of a judgment filed against me.” How do you prove that?

Better question still, what can you do?

How to Protect Your Bank Account After It Has Been Levied

There’s no easy way to say this, but at this point, your options are very limited. The first thing you want to do is contact a bankruptcy lawyer. Then, they will help you through the next part of the process.

File for Bankruptcy

You may be able to get back at least some, if not all, of the money that was levied against you if you immediately file bankruptcy. Most folks are so confused trying to track down what happened that it takes them a bit to orient themselves. Obviously, the best scenario, if you choose to file for bankruptcy is to contact a bankruptcy attorney before the levy.

Contest the Lawsuit

If the creditor’s judgment is too old to contest then this option is off the table. If you were improperly served, however, you might be able to have the judgment deferred. It will depend on whether the judge believes you.

Avoid Using the Bank Account

If the levy the creditor put on your account doesn’t pay off the entire debt, you should avoid using the bank account. They can keep levying the funds until the debt is paid in full. At this point, the question of how to protect your bank account is: you can’t. You’re just trying to protect your money.

Contact our Omaha Bankruptcy Lawyer Today

If you’re worried about how to protect your bank account from creditors, Burke Smith Law can help. Contact us today.

Chapter 7 vs Chapter 13: What’s the Difference?

Chapter 7 vs Chapter 13 - Omaha BankruptcyIf you’re dealing with mountains and debt, you likely have many questions about what you should do and how to deal with your financial troubles. Filing bankruptcy can provide the relief you need. But what’s the difference between Chapter 7 vs Chapter 13? Which should you file, and what are the pros and cons of each type of bankruptcy?

At Burke Smith Law, we can give you answers and help you understand your legal options. Call us today at (402) 718-8865 to start the process of regaining control of your finances and getting a fresh start.

What Is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy allows you to discharge most of your debt. Often called “liquidation bankruptcy,” Chapter 7 allows consumers to completely eliminate most non-secured debt quickly and easily. Secured debt, such as car loans and home mortgages, may either be eliminated. Or, you can lower the payments if you choose to keep your property. Some debts, such as tax debt and unpaid child support, is not typically dischargeable through Chapter 7.

In order to file Chapter 7, you must qualify through a Means Test, which determines if your income is low enough to be eligible for Chapter 7. If your household income is too high, you may not be able to file Chapter 7. This is one major difference with Chapter 7 vs Chapter 13.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy allows you to reorganize debts while keeping most of your property. You may combine all of your non-secured and secured debt payments into one manageable payment plan. The plan allows you to repay your debt over the course of three to five years. After five years, the remainder of most of your debt will be discharged if you have made sufficient payments over the time of your payment plan.

You do not have to qualify for Chapter 13 through an income-based test. Anyone can file Chapter 13, as long as they have not previously filed bankruptcy within a restricted time period. Determining which type of bankruptcy you qualify for is one of the most important considerations.

How Long Is the Process? Chapter 7 vs Chapter 13

Chapter 7 vs Chapter 13 vary greatly in the amount of time until discharge. Although both types of bankruptcy can help you manage debt, the length of time you will be involved in the bankruptcy process differs greatly. Both Chapter 7 and Chapter 13 require extensive legal documents, several hearings, and a meeting of creditors.

However, from start to finish, a Chapter 7 bankruptcy usually takes four to six months. A Chapter 13 bankruptcy, on the other hand, is not considered completed until the payment plan is complete, which can be up to five years. When considering filing Chapter 7 vs Chapter 13, you should have an understanding of how long your bankruptcy process will take.

Types of Debt You Can Eliminate Through Chapter 7 vs Chapter 13

All of your debt can be managed through bankruptcy; however, not all debt can be completely eliminated. For example, bankruptcy cannot completely eliminate tax debt, student loans, criminal conviction fines, and unpaid child support and alimony. However, it is possible to restructure payments and seek payment options through bankruptcy.

The way the bankruptcy court handles debt between Chapter 7 vs Chapter 13 is also very different. Chapter 7 will completely eliminate all of your eligible debts, including non-secured debt and consumer debt. It may eliminate secured debt, but you may have to forfeit, or liquidate, your property. Chapter 13, on the other hand, allows you to keep all of your property while developing payment plans for car loans, home mortgages, and other types of debt.

A Bankruptcy Lawyer Can Help You Decide Between Chapter 7 vs Chapter 13

If you’re dealing with a difficult financial situation, you may be considering bankruptcy. Our skilled attorneys can help you determine the benefits of Chapter 7 vs Chapter 13. Choosing the type of bankruptcy best suited to your situation will help you move forward with your life. Contact Burke Smith Law today at (402) 718-8865.