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Nebraska Bankruptcy Exemptions
In today’s blog, we will be discussing Nebraska state bankruptcy exemptions. Remember, this is a paralegal blog. I am a paralegal, not an attorney. I cannot give you legal advice, this blog should not be used in lieu of legal advice and all the rest of the things that are stated in the disclaimer located in the footer of this blog.
Disclaimers (Yes, This Early In The Morning)
This blog is meant to be a legal educational tool for paralegals and other legal professionals. Because so many things can often be misinterpreted as legal advice, the dissemination of legal education can be scarce.
This blog is strictly meant for educational purposes. I wish there had been more easily accessible paralegal education when I started out as a paralegal. This blog is not intended to be inclusive and may or may not be current.
Now having said that, let us, as ordinary people who never had the opportunity to attend law school, yet must abide by these rules, proceed.
What Is An Exemption?
Under state and federal law debtors are allowed to keep a certain amount of property free from the threat of creditors. These laws determine the types of property and value limits. These laws “exempt” these things from being considered for distribution to creditors.
Sometimes you have to use state exemptions, sometimes you have to use federal, sometimes you get to use both. And I always say bankruptcy law is the most straightforward… lol
Anyway! Exemptions are very important to know and understand as a consumer and definitely as a consumer law paralegal. Many consumers with no legal background think they understand exemptions, yet are usually mistaken.
I think the most common misconception is that a Debtor is allowed to keep one car. Up until recently, that was not that case for Nebraskans, and there are still states that do not have a specific exemption for a vehicle. Additionally, there are restrictions as to the value of the vehicle.
Thanks A BUNCH, Guys!
Thanks to the recent work of the Nebraska Legislature, Nebraska Bankruptcy Court and certain Nebraskan bankruptcy attorneys, Nebraskans facing financial difficulties are now allowed a little bit more breathing room when it comes to their personal property. For as long as I have been drafting bankruptcies there has never been a specific exemption in Nebraska for a vehicle.
Put 5 Eggs In This Basket, 2 In That Basket
Before, Debtors had to use the Tools of the Trade exemption (Neb. Rev. Stat. §25-1556(1)(d)). Using this exemption with the knowledge that debtors rely on their vehicles to get back and forth to work to maintain employment. But the limit was a mere $2,400.
So if you had a decent reliable vehicle that was paid off and less than 15 years old, you may be over the limit. You could use what is commonly referred to as the Wildcard exemption to try to exempt what was not covered by the Tools of the Trade exemption.
Pull the Wildcard
The Wildcard exemption is a catch-all for all personal property not otherwise able to be exempted, which at the time had a limit of $2,500. Bank accounts, pets and jewelry are some of the most common assets that were listed under this exemption.
There are states that have exemptions for jewelry and bank accounts as well. Nebraska still does not have a specific exemption for them; however, they also recently increased the limit of this exemption to $5,000.
Many Reasons For Change
Not having a specific exemption for a vehicle really hurt our disabled clients. If they were not capable of working, we could not use the Tool of the Trade exemption at all and everything had to fit into the Wildcard exemption.
The More You Know
The way vehicles were exempted for years in Nebraska and the recent changes in exemptions are examples of why it is important for paralegals to study and understand all available exemptions.
Further, you cannot simply rely on your bankruptcy software. I had to notify the bankruptcy software I was using when the changes in law went into place to update their software. (*cough* NextChapter) I was a little disappointed, but it reminded me that it is not the software’s job to know these exemptions.
But once you understand bankruptcy exemptions, they are easy. Scroll down for an infographic that we use with our Nebraska attorneys as a quick reference to some common exemptions. If you want Paralegal Power’s Nebraska Bankruptcy Exemption Cheat Sheet as a nice little pdf, just head over to our Resource Page.
will help you successfully complete your bankruptcy case without breaking the bank.
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About the Author
Valentina Zapata Harris
Mother | Advocate | Blogger