Legal Question in Bankruptcy in Nebraska

Re: Who may file Chapter 7 bankruptcy?

An individual or a family can file for bankruptcy relief under chapter 7. Also a corporation that is shutting down it's business can file under chapter 7. From my experience individuals and/or families file as a last resort based on one of three scenarios. First, the filer had a loss of income due to a layoff or medical work related injury. Second, the filer may be faced with massive debts stemming from a divorce. Third, a filer has experienced huge medical bills that were not covered by insurance. These are the reasons I find that cause people to be unable to manage their debts. PLEASE READ MY FIRM PHILOSOPOHY! I feel strongly that people should be given the chance to start over fresh. In terms of effecting credit, bankruptcy can in some aspects improve a credit report by removing massive debt. (Remember lenders are evaluating among other things a person's debt to income ratio) A person who has filed bankruptcy will be faced with paying higher interest for car loans, credit cards, and home mortgages until they have reestablished good payment history. My firm files cases in Nebraska so please feel free to give me a call to discuss your situation in more detail. ph. (800) 303-0720

Re: Who may file Chapter 7 bankruptcy?

Let me first say, my answer covers bankruptcy in only the most general of terms. For more specific information or how the law would apply in a given situation, see a Bankruptcy Attorney.

Almost anyone can file for Chapter 7 bankruptcy with a few exceptions. Whether Chapter 7 is appropriate in a given situation is the real question. It is an appropriate remedy for individuals with a large debt burden but few assets who, when eliminating monthly payments to creditors for other than basic living (housing, utilities, food, insurance) have little or no excess income. In chapter 7, debtors are allowed to keep only their non-exempt assets (up to $12,500 interest in a residence if they are married, up to $2500 in household and personal property, up to $2,400 for an automobile). Any other assets or assets that exceed the limits will be collected by the Trustee and sold to help pay back unsecured creditors.

If there is excess income, then it would be appropriate to file a chapter 13 (reorganization) bankruptcy. Generally, debtors with property that is non-exempt will file chapter 13 so they can keep all or most of the property (in order to file chapter 13, the debtor must show that creditors will get more through the chapter 13 plan than they would have in a chapter 7 bankruptcy).

With that basic primer on bankruptcy, lets move on to your other questions:

People file bankruptcy for a number of reasons. The number one inciting incident, in my experience, is divorce. More than half of my bankruptcy clients have been divorced within the two years prior to filing. Other common inciting incidents are unisured medical emergency, loss of job, death of spouse, forclosure, law suit/judgment, garnishment. Many clients have more than one reason for filing.

Bankruptcy does have an impact on the economy and how much it costs society at large is a point of debate. Credit card companies and the entire banking industry are making record profits right now while reporting dramatic increases in bad debt write-offs. Those profits clearly are coming from the interest we are charged for borrowing money.

I hope this answers your questions.