Determining which type of bankruptcy to file can be tricky. Chapter 7 is the most common type of bankruptcy in Nebraska, but this does not mean it is the right choice for everyone.

Difference Between Chapter 7 and Chapter 13 Bankruptcy

A Chapter 7 bankruptcy liquidates nonexempt assets to pay creditors and discharges the remaining debt. A Chapter 13 bankruptcy creates a repayment plan to pay a portion of the eligible debt.

To be eligible for a Chapter 7 bankruptcy, you must pass means testing. This process looks at your income and assets in relation to your current debt payments. If you can't pass the means testing, you are only able to file for a Chapter 13 bankruptcy.

Determining Which Type of Bankruptcy to File

When determining which type of bankruptcy to file, you should consider the following:

  • A person who is not eligible for a Chapter 7 discharge should not file a Chapter 7 case. 
  • In most instances, a person who has substantial debts that are not dischargeable under Chapter 7 should not file a Chapter 7 case.  
  • It is not usually advisable for a person with disposable income sufficient to make the required minimum payments to unsecured creditors to file a Chapter 7 case, because a presumption of abuse will arise and the case will probably be dismissed or converted to Chapter 13.

Schedule a Consultation with Steffens Law Office

If you are thinking about filing for bankruptcy, the experienced legal team at Steffens Law Office can help you evaluate your options and determine if a Chapter 7 or Chapter 13 bankruptcy is the best way to proceed. Call today to schedule a free, no-obligation initial consultation.

William V. Steffens
Nebraska Personal Injury & Bankruptcy Attorney With 34+ Years Of Experience