Although Nebraska does not have a specific motor vehicle exemption, you can use Nebraska's tools of the trade and wildcard exemptions to protect some equity in your car, truck, van, or other vehicle if you file for Chapter 7 bankruptcy. Here you’ll find information about the Nebraska exemptions that protect your vehicle: how much, what types of vehicles they cover, how they work for married couples, how to find the applicable statutes, and more.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
Nebraska’s exemptions play a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than the applicable Nebraska exemptions, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemptions amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
Nebraska does not have an exemption specific to motor vehicles, but you may be able to use the wildcard and/or tools of the trade exemptions to protect equity in your car or other vehicle.
Some states allow bankruptcy filers to use the Federal Bankruptcy Exemptions instead of state exemptions, but Nebraska is not one of these states.
If you use your vehicle to commute to and from work, Nebraska law allows you to protect up to $2,400 of equity.
Example. William owns a 2008 Ford Focus. His car is worth $5,000 and he owes the dealer $4,000 on the loan -- which means William has $1,000 of equity in his car. William uses his car to commute to and from his job. He can fully protect the equity in his vehicle by using Nebraska's tools of the trade exemption.
If the equity in your car is more than $2,400 or if you do not use your vehicle to commute to and from work and therefore do not qualify for the tools of the trade exemption, you may be able to cover the equity by using the wildcard exemption. Nebraska’s wildcard exemption allows you to protect up to $2,500 of equity in personal property, including your car. (Learn more in The Nebraska Wildcard Exemption in Bankruptcy.)
Example. William’s 2008 Ford Focus is worth $5,000 and he owes $4,000 on the loan, so there is $1,000 of equity in his car. William is not employed, so he cannot use the tools of the trade exemption, but he can use Nebraska's wildcard exemption to fully protect the equity in his car.
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Married couples filing a joint bankruptcy in Nebraska can double the tools of the trade exemption, for a total of $4,800. Married couples may also double the wildcard exemption, for a total of $5,000.
Learn more about joint bankruptcy options in Nolo's section on Bankruptcy Considerations for Married Couples.
You can find Nebraska’s tools of the trade and wildcard exemptions at Neb. Rev. Stat. 25-1556(4) and 25-1552.