- It is essential to understand the bankruptcy laws when filing in Kentucky.state capitol - frankfort, kentucky image by Wendy Hampe from Fotolia.com
While it may be a difficult decision, bankruptcy can provide significant financial relief for many debtors. Residents of Kentucky should understand the types of bankruptcy and the bankruptcy process in order to file correctly and avoid fraud. Consulting an attorney can aid debtors in navigating through complex bankruptcy laws and exemptions. - Several different types of bankruptcy types are available in Kentucky. Each type is called a Chapter. These Chapters can allow a debtor to relieve most or all of his debts
Chapter 7 bankruptcy is considered a liquidation bankruptcy where the debtor gets rid of all debts associated with his name. the process is relatively short; from the time of filing until the time of discharge is around 3 to 4 months.
Chapter 9 is considered a special Chapter reserved for municipalities like school and utility districts. Organizations and even whole cities or counties may file under this Chapter. Chapter 9 is a debt restructuring chapter that allows debt to be consolidated and settled into a reasonable amount.
Chapter 11 bankruptcy is also a debt reorganization designed for businesses and corporations. Companies involved in Chapter 11 may continue to operate business functions while in bankruptcy
Chapter 12 is used for individuals and families owning farms and fisheries. This Chapter is similar to a 13, but will allow for different exemptions as the nature of business is atypical to most other filings.
Chapter 13 bankruptcy is a debt adjustment filing. Debtors will pay off a portion of the debts that have been settled by creditors in this Chapter. Debtors are required to pay a monthly amount to a Trustee, who represents the creditors. Chapter 13 is a longer process where debtors will receive a discharge between 3 to 5 years. In Kentucky, a debtor may not have more than $1,010,650 in secured debt to file Chapter 13. - Some secured and unsecured property owned by a debtor is available for exemption in the state of Kentucky: $10,775 in household goods per family, jewelry up to $1,350, most public benefits including pension and retirement benefits, and up to $20,000 in home equity. "Wild card" exemptions in Kentucky include up to $12,000 in unsecured property. This exemption can be used on any household goods or secured property. Secured property is any asset or debt that has physical property attached to its value, such as a house, car, or furniture. Unsecured property is any asset or debt that does not have physical property attached to its value, such as cash, credit cards, and loans. Secured property, if not exempt, could be at risk for repossession in a bankruptcy if the value is high.
- To qualify for bankruptcy in Kentucky, debtors must past a means test.To pass the means test, debtors must supply information on the last six months of income to determine if they fall under the median income for Kentucky. The median income for a two-person household is $45,653 as of 2009. Exceeding this income amount does not mean a debtor will not qualify for bankruptcy; however, additional proof may be required to determine the debtor's financial situation. Because qualifying for bankruptcy can get complex, it is important to list all assets and debts to the attorney preparing the paperwork as the court can charge a debtor with fraud for withholding information.
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