Chapter 7 is the single most effective and, by a wide margin, the least expensive method to get out of debt. Nothing compares to Chapter 7.


How do we know Chapter 7 is the most effective option to end a debt problem? Because in a study our firm conducted in reviewing 172 cases our firm handled in 2014, all but 3 of those cases resulted in a discharge of debts.  That’s a 98% success rate.

There is not a single other debt solution to comes anywhere near that success rate.

Chapter 13 bankruptcy cases (3 to 5 year debt repayment plans) have a national success rate around 40 to 50%, and in Nebraska generally the success rate is rumored to be around 60%.  Still, that is quite a bit less effective than Chapter 7 and quite a bit more expensive as well.

What about Consumer Credit Counseling Plans headed by nonprofit organizations, aren’t those programs effective?  On average, the typical Debt Management Plan has a success rate around 25%, and even the best firms in that industry only achieve a 40% success rate.  In other words, 60% to 75% of consumer credit counseling payment plans fail.

Debt settlement programs? I have never personally met a person who completely settled all their debts by entering such a program, and our research indicates the success rate is around 5 to 10%.

So, when comparing what programs really solve a debt problem, Chapter 7 is by far the most powerful debt solution.


Chapter 7 is also the least expensive debt solution.  A typical Chapter 7 in Nebraska costs somewhere between $1,300 to $1,700.

However, a base attorney fee in a Nebraska Chapter 13 case is $4,200 plus $310 of court fees and a 10% administrative fee assessed on every payment by the bankruptcy Trustee.

So, for example, a person paying $500 per month to the Chapter 13 bankruptcy trustee for 5 years will pay out $30,000, and will thus incur a $3,000 trustee fee and a $4,200 attorney fee, for a total cost of $7,200.  That is 5 times more than the cost of Chapter 7.

However, Consumer Credit Counseling plans are even more expensive since they must pay all the debt back with interest.

So not only is Chapter 7 the most effective option in terms of success rates, it is also the least expensive option.


Nebraska Chapter 7 cases are completed in about 100 days.  The relief takes effect immediately upon filing the case (no more phone calls or garnishments or property seizures) and the relief becomes permanent upon the issuance of the bankruptcy discharge order at the end of the case.


A Nebraska bankruptcy attorney will need certain documents to prepare a Chapter 7 petition:

  1. Tax Returns for the past 2 years.
  2. Bank Statements or debit card histories for the past 6 months.
  3. Paycheck stubs for the past 6 months.
  4. The name and address of all creditors and their collection agencies along with an approximate amount owed to each creditor.
  5. A Certificate from an approved credit counseling agency proving the debtor has completed a required pre-bankruptcy course.
  6. A copy of a debtor’s identification (Driver’s License) and Social Security Number.
  7. A recent statement from the debtor’s retirement account.
  8. A copy of any active divorce decree (meaning child support is being paid or property settlement is not completed.)
  9. Name and Address of any person to whom child support or alimony is paid.


There are income limits to filing Chapter 7.  Generally, only debtor’s whose income is below the state median income level are eligible to file Chapter 7.  The median income figures are adjusted for inflation and are reset every six months by the U.S. Trustee’s office.

As of May 1, 2020, Nebraska median income figures were:

  • $49,680 for a household of 1
  • $69,294 for a household of 2
  • $78,674 for a household of 3
  • $95,445 for a household of 4

The median income figure is based on the average monthly income earned in the 6 months prior to bankruptcy. (This is the reason a Nebraska bankruptcy attorney will request 6 months of paystubs and bank statements.)

Debtors whose income is above these median income figures may still be able to qualify for chapter 7 if their attorney can demonstrate that the income is consumed by secured debt payments, medical expenses, child support and other necessary expenses.

One of the primary skills of a Nebraska chapter 7 attorney is to present a debtor’s income and expenses in a manner that allows them to qualify for chapter 7 relief.


Although most people who file Chapter 7 in Nebraska keep all their property, there are limits and some filers will lose a portion of their property.

The laws which protect property in bankruptcy are called Exemption laws.

The number one duty of a Nebraska chapter 7 attorney is to create an accurate list of all of a debtor’s property and to identify what property, if any, is at risk. The attorney must go through an extensive interview to outline all of a person’s property and property transfers during the past two years.

Chapter 7 is an inherently dangerous process because the bankruptcy trustee assigned to the case has a duty to review the property list and to sell off any worthwhile property that is not protected by an exemption law.  Trustee’s are paid a commission for finding and selling unprotected property, so their power must be respected and debtors with questionable property exemption claims should be aware of the risk of losing their home and other valuable property.


A great concern in chapter 7 cases is whether a debtor may retain property that is subject to a lien or security agreement, such as cars and homes.

Chapter 7 offers two methods of retaining property subject to a security agreement.

Reaffirmation Agreements are written agreements that are signed by a debtor and the creditor to continue payments on a secured loan, such as a home mortgage or an auto loan. The agreements are voluntary and are routinely signed when a loan is current and the debtor has maintained required insurance coverage.

Redemption is the second way to retain property subject to a lien and it requires the debtor to file a motion to redeem the property for the current fair market value of the property or, in the alternative, for the debtor and the creditor to enter into a written redemption agreement.  When property is redeemed from a creditor the debtor is typically required to make one lump-sum payment for the value of the property.

Reaffirmation agreements are very common in chapter 7 since they allow debtors to maintain regular loan payments.  Redemptions are relatively rare since a debtor must fully pay the property’s value in one lump-sum payment to the creditor.


About 30 days after a Chapter 7 case is filed in Nebraska, the debtor must attend a court meeting with the Trustee and creditors may attend the meeting as well, but few actually attend.  This meeting is required under Section 341 of the Bankruptcy Code and is therefore referred to as the “341 Meeting.”

341 Meetings occur in Omaha, Lincoln, North Platte, Scottsbulff and Gering Nebraska.  Debtors and creditors receive a notice of this meeting about 30 days in advance.  It is a public meeting in a federal courthouse or at a designated meeting place.

The Chapter 7 Trustee has two basic duties at these meetings.  First, the Trustee must verify the debtor’s identity and will ask to see a Driver’s License or other official form of identification.  The trustee will also verify the debtor’s Social Security number and will have the debtor testify if they signed the bankruptcy petition and whether the petition lists all of the debtor’s property, debts, income, expenses and property transfers.

The second duty of the Trustee is to liquidate all non-exempt property that is worthwhile selling.  For this reason, the Trustee will closely examine the list of property and will ask questions about how property was valued and whether any property was transferred in the two years prior to filing bankruptcy.

Most meetings with a trustee last only a few minutes.  A trustee will normally interview 6 or more debtors in a half-hour timeslot, so these meetings tend to go by quickly if a petition is property prepared.


If no creditor objects to the bankruptcy petition during the 100 days the case is open, the court will automatically issue a Discharge order that is mailed to the debtor and all creditors. The discharge order makes the bankruptcy protection permanent.