Does Kentucky make you think of anything besides the Kentucky Derby and distilleries? What about debt? Is your pile of unpaid bills as high as the rolling hills of the Bluegrass State and in danger of sweeping you into Mammoth Cave National Park? If so, then you may want to consider filing for a Chapter 7 Bankruptcy.
A Chapter 7 can wipe out most of your unpaid debts, including credit card and medical bills, as well as unpaid tax debts.
Filing for Chapter 7 in Kentucky Will Erase Your Debts with the Speed of a Racing Thoroughbred
A Chapter 7 bankruptcy can wipe out many of your debts. Things like old tax liens, credit card debts, and medical bills will vanish faster than you can say, “Put your money on Horse #6.” Okay, the process does take around 6 months and you’ll need an attorney to help you out with the paperwork and official petition (the financial documents filed with the bankruptcy court), but once your petition gets to a judge and official trustee (who represents all of the creditors who owe you money) your debts will be cleared quickly.
There are a few things that a Chapter 7 can’t help you with. Like it or not, you’ll still be responsible for:
- Student loans
- Recently filed tax debts
- Child support or alimony payments
Bankruptcy does take care of almost everything else, though. Your bankruptcy lawyer is there to help you determine exactly which of your debts will be dismissed. He will help you come up with a plan or payment agreement for those that won’t through a Chapter 13 bankruptcy.
Do Kentucky Residents Need to Qualify for a Bankruptcy, Chapter 7?
There are two ways to know if you qualify for bankruptcy, Chapter 7. The first is easy. Take a look at the chart below. If your income falls within the median income limits for the size of your family, then you qualify. If you make too much money, however, don’t panic – your bankruptcy attorney can apply something called the means test. If your debts are too large for your income and you’re living way beyond your budget, you may still qualify. The means test was created in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, and it can determine if you qualify for Chapter 7 or Chapter 13 bankruptcy. If you meet the requirements for a Chapter 13 bankruptcy, you will need to supply additional financial information.
The median income level requirements for the Bluegrass State of Kentucky are as follows:
- 1 person – $37,606
- 2 people – $45,081
- 3 people – $51,883
- 4 people – $63,768
- More than 4 people: Debtors must add $7,500 per family member to the income level for families over 4 members.
What’s next in the Chapter 7 Bankruptcy Process?
Qualifying is just the first step for bankruptcy, Chapter 7. The next is to make an appointment with a bankruptcy attorney. He or she will help you by answering any questions, filling out your official petition for bankruptcy (which is a set of financial documents that gets filed with the court), and will represent you in front of the judge and trustee to clear your slate of debt. In order to start things off on the right foot, you’ll need to bring in the following documents when meeting with your attorney for the first time:
- A list of your debts. Whether they qualify for dismissal or not, you’ll need a list of all creditors. In some cases, you may also need past statements and other information.
- Your last six months' worth of paystubs.
- Last year’s filed tax return (and your spouse’s return, as well)
Your petition for bankruptcy needs to be done right. A Chapter 7 bankruptcy petition that has missing or improper information will be dismissed immediately, leaving you with all of your unpaid bills. It’s your attorney’s job to help to ensure that doesn’t happen.
After you file your petition, you will be required to attend a short hearing called a “Meeting of Creditors.” During this meeting the trustee and the judge may ask you and your attorney some short questions. The hearing lasts only a few minutes and generally does not change or disrupt the process of your bankruptcy filing. After your hearing, if no amendments are needed, you should receive a discharge in about 90 days from your hearing date.
You Can Keep the Farm and the House
Kentucky residents are allowed to keep a certain amount of property once they file for Chapter 7 bankruptcy. While some states only allow debtors to claim state exemptions, residents in Kentucky may choose between state or federal exemption laws. This lets the debtor have a greater choice in choosing which exemptions work the best based on his/her financial situation.
The Kentucky exemption laws include:
- Housing exemption: Up to $5,000 in value for a home (Note that the federal home exemption limit is $21,624)
- Other personal property:
- Vehicle: $2,500
- Tools of trade for a business: $300
- Library or office equipment: $1,000 (specific professions apply)
- Other types of land or proceeds from the sale of a house: $5,000
- Benefits and pension – 100% of the following:
- State employees' retirement benefits
- Interests in pension or profit sharing plans--CIA Employees
- Teachers' retirement benefits
- Basic no-fault insurance benefits
- Longshoremen and harbor workers' medical, disability and
- death benefits
- Reparation benefits from Motor Vehicle Reparations Act
- Unemployment compensation benefits
- Workmen's compensation benefits
- Police and firemen's pension benefits in cities of first through fourth classes
- FEMA benefits
- Miscellaneous exemptions:
- 100% certain retirement accounts defined by the IRS
- 100% annuities payable for service in the General Accounting Office
- Up to $7,500 in bodily injury payments
- 100% Crime victim's reparation law awards
- 100% Money accruing from lease or sale of lands held in trust for Indians
Not sure what exemptions work the best for your Chapter 7 bankruptcy case? Your Kentucky bankruptcy attorney can help you apply the right ones depending on your financial status. Be sure to check before you file to make sure the exemption amounts are up to date.
There is no need to fret any longer about your finances. Call a bankruptcy, Chapter 7 attorney today to completely rid yourself of your bad debt.
Kentucky Bankruptcy Courts
Community Trust Building
100 East Vine Street, Suite 200
Lexington, Kentucky 40507-1442
Phone: (859) 233-2608
Louisville, Kentucky Bankruptcy Court
Gene Snyder United States Courthouse
601 West Broadway, Suite 260
Louisville, Kentucky 40202-2238
Phone: (502) 527-5800