Nebraska Debt Relief: The Tools You Need to Escape the Debt Trap

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Though Nebraskans’ average credit card debt is lower than average, it is still significant.

The state’s average of $4,819 lands them at #36 in the U.S., while the average personal loan balance is estimated at $24,901 and has an 8.75% average interest rate.

If you’re a Nebraskan struggling with debt, there are resources that can help. To learn about them, read on.

Are you eligible for debt relief?

If you’re a Nebraska resident, DebtHammer may be able to help.

Learn More

Nebraska overview

The total estimated population of Nebraska is 1,963,692, making it one of the least populated states. In 2020, the poverty rate was 9.2%, which is lower than the national average of 11.6%.

According to the census, the median household income in Nebraska is around $63,015. For comparison, the real median household income in the USA is about $70,000.

Read along to learn about your options if you need debt relief and financial assistance.

Nebraska debt statistics

  • Average household debt: $42,139
  • Average student loan debt: $31,919
  • Average credit score: 728 (in the top 10 states with the highest credit score)
  • Median mortgage payment: $1,352 average mortgage payment
  • Bankruptcies: 131.84 per 100,000 residents (2021)
  • Personal income: $52,110 annual mean wage for all occupations
  • Child poverty: 11% (2019)
  • Unemployment: 2.2%

Debt relief options

Debt relief exists for Nebraskans, including:

  • Debt consolidation loans: The act of consolidating debt involves rolling several debts into one loan (or credit card). This is useful if the new loan has a lower interest rate than the original debts. It’s also helpful for managing payments since you only need to make one each month.
  • Debt settlement: Debt settlement agencies can help you settle large debts – usually for up to 50% of what you originally owed. You may need to pay the new amount in a lump sum. The agency may also charge a service fee based on the amount of debt settled.
  • DIY plans: Do-it-yourself debt settlement plans are another useful way to pay off high amounts of credit card or loan debt. Instead of going through an agency, you’ll work directly with your creditors to reduce your debt. This requires strong negotiation skills.
  • Debt Management Plan: Offered through nonprofit credit counseling agencies, Debt Management Plans can also help with debt relief. With one, it can take anywhere from 3 to 5 years to pay off any eligible debts.
  • Bankruptcy: Declaring bankruptcy is generally considered a last resort, but it could give you a fresh start if you face overwhelming debt. The two main types of personal bankruptcy are Chapter 7 and Chapter 13.

Debt settlement resources

Debt settlement involves negotiating with your creditors to reduce the total you owe. In Alabama, virtually all unsecured debts can be settled. This includes:

  • Credit cards
  • Department store cards
  • Personal loans or lines of credit
  • Personal lines of credit
  • Old judgments
  • Student loans in default

You can settle your debts in two ways:

  • Negotiate directly with your creditors
  • Use a professional debt settlement company

Debt settlement companies

Debt settlement attorneys

Debt resources for Nebraska residents facing hardship

Nebraska has many local and state resources available for Nebraskans facing financial hardship. This includes:

  • Pro bono or low-cost legal aid
  • Housing assistance and bill pay
  • Low-cost childcare
  • Job training and employment resources

Almost half of Americans are struggling to put food on the table. The state also has many food banks and pantries, which provide free, nutritious food to low-income households. Here are a few of the bigger ones:

St. Vincent De Paul Society Pantry

  • 2101 Leavenworth St, Omaha, NE 68105
  • (402) 866-0081

Heartland Hope Mission

  • 2021 U St, Omaha, NE 68107
  • (402) 733-1904

Hope Harbor Food Pantry

  • 615 W 1st St, Grand Island, NE 68801
  • (308) 385-5190

Helping Hands – Kearney

  • 1724 1st Ave, Kearney, NE 68847
  • (308) 627-4859

Care Corps. Inc

  • 549 N H St, Fremont, NE 68025
  • (402) 721-3125

If you’re looking for a food bank nearby, check with Food Bank for the Heartland. The site includes a comprehensive list of food banks based on zip code and distance.

Debt collection laws

Nebraska residents are protected by the Fair Debt Collection Practices Act (FDCPA). Enacted in 1978, this law is meant to prevent third-party debt collectors from using deceptive, threatening, unfair, or abusive tactics to collect unpaid debts. The FDCPA does not apply to creditors collecting their own debts.

Although debt collectors are limited, they can still do a few things, including:

  • No longer do business with the person who owes the debt.
  • Report accounts in default to credit reporting agencies (ex. Experian or TransUnion)
  • Initiate a lawsuit to try to collect the debt (this could also lead to wage garnishment)

State law in Nebraska requires debt collectors to register with the Secretary of State before conducting business as a collection agency. This falls under Statute 45-601.

Statute 45-601 indicates that a collection agency must be licensed in order to collect debts from anyone. Failure to obtain licensing will result in a class III misdemeanor for each day that the business continues to operate. The maximum penalty for this misdemeanor is 5 days in jail and a $300 fine.

READ MORE: How to deal with debt collectors when you can’t pay

Income and employment

According to the U.S. Bureau of Labor Statistics, Nebraska had an unemployment rate of 8.2% in 2020. By September 2022, that number had dropped to 2.2%. Nebraska, South Dakota, North Dakota, Connecticut, and Wyoming have some of the lowest unemployment rates in the country.

In terms of job creation, Nebraska is currently ranked 38th out of 50 states.

The state of Nebraska is a right-to-work state (Statute 48-217). This means employees in the state do not have to join a union in order to be employed. The downside is that employees of Nebraska often have less job security than states that do require union membership. They may also have lower wages.

Nebraska is also an employment-at-will state. This means that a company can fire any employee for any or no reason at all. There are a couple of exceptions to this, such as discrimination. However, employment-at-will states generally have less job security than other states as well.

How to apply for unemployment benefits

The Department of Labor in Nebraska offers a breakdown of how to apply for unemployment benefits. Before submitting a claim for unemployment benefits, register on NEworks for re-employment. After that, either file a claim online at NEworks.nebraska.gov or apply in person at a local job center.

Applicants will need several pieces of information including their:

  • Social Security Number
  • Home address
  • E-mail address and phone number
  • Military status
  • Government-issued ID (ex. driver’s license or passport)
  • History of employment and income

It can take up to 21 days to process claims, so get started as soon as possible to avoid delays. You’ll need to check all forms of communication while waiting for your claim to be processed. Along with this, file for weekly benefits at NEworks.

Banking and taxes

Like many other states, Nebraska has a graduated individual income tax ranging from 2.46% to 6.84%. Currently, the four tax brackets are:

  • 2.46% for individuals on the first $2,399 ($4,799 for joint filers)
  • 3.51% for individuals on $2,400 to $17,499 ($4,800 to $34.999 for joint filers)
  • 5.01% for individuals on $17,500 to $26,999 ($35,000 to $53,999 for joint filers)
  • 6.84% for individuals on $27,000 and up ($54,000 and up for joint filers)

There may be exceptions to this rule. The exact income amounts are also subject to change each year.

As for sales tax, Nebraska’s current rate is 5.5%.

In terms of banking, an estimated 6.5% of Nebraskans didn’t have a checking or savings account in 2019. That’s around 127,639 people.

Housing market

According to the Census, approximately 66.20% of Nebraska residents own their own house. The state offers homestead exemptions to those who are eligible. Criteria depend on things like the value of the home, the age of the individual, and whether they’re a veteran or have a qualifying disability.

For example, homeowners over the age of 65 with an income under $30,700.99 could protect 100% of their home equity – up to $40,000 of the assessed value. For more information on the homestead exemption, refer to the Department of Revenue.

Currently, the average price for homes in Nebraska is around $248,627. This is a 10.2% increase over the past year, but it’s still over $109,000 lower than the national average home value of $357,810. The median mortgage payment is $1,427 – less than the national average.

Rental prices vary based on the city, neighborhood, and apartment size. In Omaha, a city with nearly half a million people, the average rent for an apartment if $1,101.

Retirement in Nebraska

According to Personal Capital, the average Nebraska resident has just over $400,000 saved up for retirement. The amount needed to live comfortably in retirement varies based on things like city and other assets. However, one study found that Nebraskans should have $629,051 set aside to maintain their standard of living during retirement.

Average insurance premiums

Nebraskans spend, on average, $1,794 each year on car insurance premiums. This is around $150 a month. It’s also several hundred dollars higher than the national average.

The average home insurance policy on a property valued at $250,000 costs about $2,800 a year, or $233 or so a month. This is almost double the national average, but partly due to environmental risks and weather conditions.

Payday lending status: Prohibited

Payday lending is a major concern throughout much of the United States. In 2020, Nebraskans passed a ballot measure to cap payday loan interest rates to 36% APR. This measure passed with more than 80% support.

Since then, every payday lender has shut down in the state.

Statute of limitations on debt

The statute of limitations on debt (the period in which a debt collector can take legal action to collect the owed amount) depends on the type of debt:

  • Medical debt: 5 years
  • Credit card debt: 4 years
  • Auto loan debt: 4 years
  • State tax debt: 3 or more years

State hardship programs

Nebraska has many state-specific hardship programs to help residents in need. Here are some of the main ones:

Nebraska also offers economic assistance and employment support to people who need it.

Help for veterans

An estimated 126,951 veterans lived in Nebraska in 2020. The Nebraska Department of Veterans’ Affairs offers many resources to help veterans struggling with finances or to reintegrate into civilian life.

Facilities in Nebraska

The primary VA hospital is in Omaha. Here are some of the main VA offices in Nebraska and how to contact them:

Adams County Veterans Service Office

  • 300 N. Joseph Ave. PO Box 613
  • Phone: (402) 461-7162

Nemaha County Veterans Service Office

  • Wellness Center 601 J Street Auburn, NE 68305
  • Phone: (402) 274-3419

Douglas County Veterans Service Office

  • 1111 S 41st St Omaha, NE 68105
  • Phone: (402) 444-7180

Lancaster County Veterans Service Office

  • 605 S 10th St Room 373 Lincoln, NE 68508
  • Phone: (402) 441-7361

Sarpy County Veterans Service Office

  • 1102 E 1st St Suite 5 Papillion, NE 68046
  • Phone: (402) 593-2203

For a complete list of VA offices, check out the official directory.

Employment resources for Veterans

Here are some resources for veterans looking for financial assistance or help transitioning back into civilian life:

  • CareerOneStop is a one-stop shop for job resources plus an online job search portal
  • VeteranRecruiting.com offers employment assistance, a virtual recruitment center, and online career fairs
  • Helmets to Hardhats is a national program helping veterans get into a construction career
  • Hiring Our Heroes is a national program designed to help veterans with career and education opportunities
  • My Next Move is a comprehensive website for veterans and non-veterans alike trying to find a civilian job that uses their military skills
  • Warriors to Work offers career counseling and other job-related services

The bottom line

Debt relief and financial hardship programs are prevalent throughout the state of Nebraska if you know where to look. Many of these resources are state-specific, but some are nationwide. Whether you need help getting a handle on debt or are struggling with monthly expenses, there are options.

FAQs

How long can a debt be collected in Nebraska?

This depends on the type of debt, but most debts cannot be collected 5 years from the date of the last payment. After this point, debt collectors cannot sue you.

When does the statute of limitations begin in Nebraska?

The statute of limitations begins on the date of your last payment on the debt. If you make another payment after the statute of limitations expires, it may restart.

Am I responsible for my spouse’s debt if I get divorced in Nebraska?

When you get divorced in Nebraska, most existing debts are divided in the same way as assets. If your spouse acquired a debt before marriage, that debt is typically their responsibility. If the debt was acquired during the marriage, it might be both of your responsibility. Speak with a divorce lawyer for more information.

About The Author

Angela Watson is a personal finance writer specializing in loans, money management, investing, retirement planning, and financial literacy. She's on a mission to help others understand personal finance and regain control of their money.
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