Kentucky Bankruptcy Laws

How to File Bankruptcy in Kentucky

Bankruptcy is the means for freeing eligible individuals from undue debt. Bankruptcy is not the right choice for every individual, but it can help those who qualify. This kind of relief is for those who can only pay the minimum amounts of their bills; cannot set their budgets to be debt free in a maximum of five years; have received foreclosure notices on loans and mortgages; or have endured financial loss through job loss, divorce, illness, or loss of a client.

Bankruptcy clears only some debts, others the individuals are still responsible. Bankruptcy does not handle child support, student loans, alimony, government agency penalties and fines, cash advancements of more than eight hundred twenty-five dollars in a filing of seventy days, back taxes, purchases on luxury items exceeding five hundred fifty dollars in a filing of ninety days, or fraudulent debts.

Different Types of Bankruptcy

Individuals, who are considered as consumers, have the option of filing for one of two types of bankruptcy in Kentucky. These include Chapter Thirteen bankruptcy and Chapter Seven bankruptcy. Chapter Thirteen bankruptcy allows filers to use their own income to pay off debts. Chapter Thirteen bankruptcy sets up a payment plan that can span no more than five years, but can also be as less as three years, for when debts are to be paid.

Based on each individual situation, certain amounts are designated for each month. Those who have filed for Chapter Thirteen bankruptcy are expected to keep to the payment plan, and if any monthly payments are missed, problems will ensue. An evaluation will decide which type of bankruptcy is best for which individual. If a filer can pay one hundred sixty dollars or more a month on his or her debts, then Chapter Thirteen bankruptcy will most often be the result.

Upon evaluation if an individual can pay only one hundred dollars a month on his or her debts, then Chapter Seven bankruptcy is usually the result. Chapter Seven bankruptcy allows filers to pay of their debts by selling certain kinds of property for a valued price. An assigned trustee will handle the procuring of the items and will pay the creditors will the compensation acquired.

Certain items will most likely be sold, including luxury items and un-necessities. Other items are labeled exempt from sale, and can include motor vehicles, separate real estate, homes, businesses, most personal plans, and furniture. If an item has not been deemed exempt and the filer wishes to keep it, then he or she is required to pay the designated sale value for the item as if it were to be sold otherwise.

Bankruptcy Abuse Prevention Act

A new bankruptcy law was created in 2005 that will keep bankruptcy from being abused. This act, called the Bankruptcy Abuse Prevention and Consumer Protection Act, has set increases to Chapter Thirteen payments, new bans for Chapter Seven filing, reductions for judicial caution for the balance of competitive interests, and new assumptions for filers with high penalties. This new act became effective in Kentucky as of the seventeenth of October 2005.

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