There are many circumstances that are related to financial troubles. A few common reasons include heavy debt, divorce, sudden unemployment, serious illness, or foreclosure.
In fact, the average credit card debt in Kentucky is a whopping $4,789 per person. In addition, foreclosure rates are also as staggering, one out of every 3,062 KY homes is currently in foreclosure.
If you can relate to the scenarios above, then you are probably battling 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 may have even considered Claiming Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are certainly not alone. Almost 1 million people file bankruptcy each year in the US. Bankruptcy is a device created by the US Government to help struggling Americans find relief from substantial debt. You may want to check your eligibility for bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy gives people the opportunity to get out from underneath considerable debt while still working with lenders in a legal capacity. It is started by an individual filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or married couples jointly. When the bankruptcy is over, the filer will ‘exit’ with a fresh new start.
Throughout the bankruptcy, a trustee is appointed to oversee the deatils of the matter. His or her responsibilities differ and depend on whether the person has filed for Chapter 7 or Chapter 13 bankruptcy.
Did you know that Kentucky ranks #8 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 391 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
Individuals or couples in Kentucky, who claim bankruptcy, will elect to file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Want to know the difference? Look below for more information
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.
Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation
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 retain your valuable assets over a 3- to 5-year period.
In order to determine which type of bankruptcy a person can file, he or she will have to assess their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The goal 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.
- Real or personal property used as a family residence up to $5,000. Alternatively, you can use this exemption to protect sale proceeds or a burial plot. (427.060, 427.090)
- Annuity contract proceeds up to $350 per month
- Fraternal benefit society benefits
- Group life and health insurance proceeds.
- Health or disability insurance proceeds.
- Life insurance proceeds.
- Alimony, maintenance, or child support needed for support.
- 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
- ERISA – all qualified benefits that were deposited more than 120 days before filing for bankruptcy.
- Firefighters and police officers
- State and county employees
- Motor vehicle up to $2,500; health aids; clothing, furniture, jewelry, and articles of adornment up to $3,000 total.
- Lost earnings payments needed for support; wrongful death recoveries for person you depended upon for support; personal injury recoveries up to $7,500, but not including pain, suffering, or pecuniary loss.
- Medical expenses paid and reparation benefits received under the motor vehicle reparation law.
- Public assistance
- Crime victims’ compensation
- Unemployment compensation
- Workers’ compensation
Tools of Trade
- Farmer’s tools, equipment, livestock, and poultry up to $3,000. (
- Nonfarmer’s tools up to $300; motor vehicle of mechanic, mechanical or electrical equipment servicer, minister, attorney, physician, surgeon, dentist, veterinarian, or chiropractor up to $2,500.
- Library, office equipment, instruments, and furnishings of a minister, attorney, physician, surgeon, dentist, veterinarian, or chiropractor up to $1,000
- The greater of the following: 30 times the federal minimum hourly wage per week or minimum of 75% of disposable weekly earnings. A judge can approve more for low-income debtors.
- Any property up to $1,000
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 a lawyer to declare bankruptcy. People 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. Going it alone is not recommended.
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
In most cases, 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. In addition, 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 KY, 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 Kentucky
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 KentuckyGene Snyder United States Courthouse
601 West Broadway
Kentucky Western Bankruptcy Court
Community Trust Building
100 East Vine Street
Kentucky Eastern Bankruptcy Court
Additional Kentucky Resources
Foreclosure Help Program
Disability SSDI Benefits