There are many causes that are associated with financial issues. Some common reasons include overwhelming debt, sudden unemployment, divorce, home foreclosure, or sudden illness.
In fact, the average credit card debt in Connecticut is a whopping $6,453 per person. In addition, foreclosure rates are also as staggering, one out of every 1,286 CT homes is currently in foreclosure.
If you can relate to the scenarios above, then you are probably struggling with other personal issues that come with dealing with debt. The fear of losing your car, house or your income can drain a person emotionally & physically. You have probably even considered Declaring Bankruptcy .
If you are thinking “Is Bankruptcy Best For Me?” you are undoubtedly not alone. Just under a million people file bankruptcy each year in America. Bankruptcy is a tool provided by the US Government to help struggling Americans find relief from un-payable debt. You may want to research bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy offers people the chance to lift their financial burden while still working with lenders in a legal capacity. It is initiated by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or by spouses jointly. When the bankruptcy is finished, the filer will ‘exit’ with a fresh new start.
Throughout the bankruptcy, a trustee is appointed to oversee the particulars of the case. His or her responsibilities differ and depend on whether the person has filed for Chapter 13 or Chapter 7 bankruptcy.
Did you know that Connecticut ranks #33 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 187 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
Individuals or couples in Connecticut, who claim bankruptcy, can choose to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. What is the difference? Look below for more information
Chapter 7
The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.
The proceeds collected during liquidation will be used to repay debtors that were listed on the bankruptcy filing.
Chapter 13
If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. You will be allowed to keep your valuable assets over a 3- to 5-year period.
In order to determine which type of bankruptcy an individual can file, he or she will have to determine their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The objective of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It considers your:
- income and expenses
- household size and composition
- debt-to-income ratio
If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.
What Are Bankruptcy Exemptions?
The federal bankruptcy exemptions are a list of exclusions by Congress that are available to filers in specific states. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
Unless otherwise noted, all law references are to the Connecticut General Statutes Annotated.
Homestead
- Owoner-occupied real property, including mobile or manufactured home, up to $75,000. This only applies to claims arising after 1993. In money judgement cases arising out of services provided at a hospital, up to $125,000.
Personal Property
- Spendthrift trust funds needed for support. Tuition savings accounts.
- Motor vehicle up to $1,500; food, clothing and health aids; appliances, furniture and bedding; wedding and engagement rings; burial plot; residential utility and security deposits for 1 residence; proceeds for damaged exempt property; transfers made to a licensed debt adjustor.
Wages
- Minimum 75% of earned but unpaid disposable earnings or 40 times the state or federal minimum hourly wage; the greater of the two amounts will be used.
Pensions
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,283,025.
- State employees.
- Municipal employees.
- Teachers.
- Medical savings accounts.
- ERISA-IRAs, Roth IRAs, Keoghs, and other qualified benefits, but only to the extent wages are exempt.
Public Benefits
- Unemployment compensation.
- Workers’ compensation; veterans’ benefits; social security; crime victims’ compensation; public assistance.
Tools of Trade
- Arms, military equipment, uniforms and musical instruments of military personnel; tools, books, instruments and farm animals needed.
Alimony and Child Support
- Alimony, to extent wages are exempt. Child support.
Insurance
- Life insurance proceeds, dividends, interest, or cash or surrender value:
- Life insurance proceeds if policy prohibits use to pay creditors.
- Fraternal benefit society benefits.
- Health and disability benefits; disability benefits paid by association for its members; unmatured life insurance policy dividends, interest, or loan value up to $4,000, if the beneficiary is a dependent.
Misc.
- Farm partnership animals and livestock feed that are required to reasonably run the farm where 50% or more of the partners are from the same family.
Wildcard
- $1,000 of any property.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
You are not required by law to hire an attorney to declare relief. Individuals are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not for the faint of heart.
Filing Bankruptcy without an Attorney
A basic Chapter 7 proceeding that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t involve an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
For most people, it is usually in one’s best interest to work with a bankruptcy lawyer. A bankruptcy attorney is there to represent you and not the creditors.
An attorney is also accustomed with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in CT, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Connecticut
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In Connecticut
Additional Connecticut Resources
Foreclosure Help Program
HomeReliefProgram.com
1-877-494-9007
Disability SSDI Benefits
DisabilityApproval.org
1-888-640-7856