Most bankruptcy cases either involve a foreclosure or “discharging” unsecured debts such as credit cards. If you are attempting to save your home from a foreclosure you normally want to file a Chapter 13 Bankruptcy. If you have an average income and little in assets such as less than $45,000 in equity in your home, then you probably want to file a Chapter 7 Bankruptcy. The exemptions that allow you to keep property change from state to state. Kentucky, like most states, uses Federal exemptions. Indiana, Florida and Texas use their own state rules.
Feeling lost with questions and need some help with your case? Contact an experienced Louisville bankruptcy attorney, just give us a call at (502) 625-0903 or use the form to the right to send us an email.
Getting a free credit report first will help you in listing your debts. When you list your debts in your bankruptcy petition you will need the name address amount and the account number for each debt and to list each debt as secured or unsecured. One source for a free report is annualcreditreport.com. Do not pay for any added services — the free report is enough.
We try to design a petition that allows you to keep more property and discharge more debt. Following the 1-2-3-4 step process on the home page makes it simple and easy.
Bookmark our Bankruptcy website – don’t lose it! You will need this information later and it is updated frequently.
This information is educational, not legal advice. If you have specific Chapter 7 or 13 bankruptcy questions ask a Louisville bankruptcy attorney or contact us about being your lawyer.
Frequent Questions on Filing Bankruptcy
Should I File Bankruptcy?
A person should file a bankruptcy if, and only if, he or she can’t pay bills as they come due or is about to lose property or have property attached by the Court. A Chapter 7 bankruptcy normally has less impact than a foreclosure or repossession on credit. A Chapter 13 takes 3 years if your income is less than the average income, or 5 years if above average, but it has more powerful tools and may cost less in the long run if you are stripping a second mortgage than a Chapter 7.
Very few people lose property when they file bankruptcy. For 2011 in Kentucky, you are allowed to keep about $3,450 equity in a car, $10,775 in personal household goods, $21,625 in a home, and at least $1,000 in any property that you choose in a general exemption plus ½ of the unused portion of the home exemption. The exemptions are adjusted in April every year. For married couples filing jointly, these exemptions are doubled. See our website for the current amounts.
To stop a foreclosure in Kentucky with a Chapter 13, you only need to cure the arrearage within a reasonable time period, and you may take up to five years.
Only seven magical items can be paid in a Chapter 13 but not discharged: Child support, alimony; taxes less than 3 years old; federally guaranteed student loans; debts due to fraud; debts due to drunk driving; debts due to intentional injuries; and criminal restitution. There are exceptions to even those, such as student loans can be discharged if they are an undue hardship. When in doubt, always list the debt when filing: It may be bankruptable due to an exception.
Can I Plan My Bankruptcy?
Of course! Planning allows you to save more money and property and gives you a workable budget for success. For instance, you may wish to delay filing your bankruptcy to insure that your taxes are over 3 years old and dischargeable. This is just like taking proper tax exemptions when you file a return. There is nothing illegal or improper with properly taking exemptions. But you can become too greedy in converting assets. Always involve your attorney in planning your bankruptcy. Waiting a few months until your tax debt becomes bankruptable is acceptable. Converting large amounts of corporate assets into your retirement or going on a spending spree with credit cards just prior to filing isn’t.
What are the Common Mistakes?
Not showing up for your hearing, failing to take the second class after your file and not listing all of your property/debts. Fail to show up at the hearing, and your case may be dismissed. Fail to list a debt, and you may have to reopen your case after discharge to add it, with considerable cost and time spent. The best policy is to list all debts and assets. List every debt, even if you think it is non-dischargeable. It may be discharged anyway. You may wish to list large utilities, but you may be required to make a deposit equal to one month’s service if you do discharge a utility. Cable is not a utility.
What if the Court Does Not Approve My Bankruptcy?
If there is anything wrong with your Chapter 13 or Chapter 7 bankruptcy, it can normally be easily corrected by amendment. Of course, it is less costly and time-consuming to do it right the first time. If you earn so much money that you can afford a Chapter 13, you will be forced to convert it from a Chapter 7 to a Chapter 13. Repayment plans are often modified. Occasionally a case will be dismissed because of fraud, but not being approved is very, very rare.
Are Bad Debts Erased From My Credit Report?
No! What is reported is that you had a debt and that a bankruptcy was filed. Bankruptcy does not give you a good credit record or “repair” your credit record automatically. You repair your credit by paying your debts on time after the bankruptcy and by deleting inaccurate information from your report.
Can I File Without An Attorney?
Yes. You can file a Bankruptcy yourself. This is called “filing pro se.” Anyone can fill out a form. But when to file, what chapter to file, how to use each exemption, and a ton of other options have to be done right. Do it one way and you will keep property or discharge a debt. Do it wrong and there is often no way to reverse it. Doing it yourself while you are emotionally upset is not a good idea.
When you go to some law offices it may be not much better than if you did it yourself. If a secretary or paralegal is preparing your return instead of an attorney it may be no better than if you did it. That is why I prepare each and every petition with you personally and go to court with you. Doing your own case is a very bad idea. First, if you are in a Chapter 13, the money you saved by using an attorney will only be used to increase the amount you pay to the unsecured Creditors. There is no “savings” to pro se filing a Chapter 13. You only cause yourself more work and lose the expertise of the attorney to help you plan and process the case. If you file a Chapter 7 case the attorney fee is about 1000 often you would better off working a little overtime or side job for a short time and having it done right.
There are also problems if you file pro se. If you file a reaffirmation and represent yourself, it must be approved in a hearing by the Judge, and that will mean extra hearings and time for you. Consider the time and risk involved. You often lose far more in court than what the attorney would have cost — plus there is the extra time and effort on your part doing the work. You are normally better off working overtime to make it up.
Can I File Jointly With My Spouse?
Yes, you can file jointly or separately. Sometimes a spouse may want to file separately to delay a foreclosure even longer. The first spouse files the first Bankruptcy and delays the foreclosure 6 months or more, and then the second files just prior to the sale and the second Bankruptcy delays the foreclosure an additional 6 months to a year or more.
Your spouse doesn’t have to file with you, but if most of your debts are joint debts, he or she may want to file with you. There are few reasons for a spouse to file if the debts are not in their name. If you are filing a Chapter 7 and the bills are also in your spouse’s name, he or she should generally file. (Cosigners are protected in a 13 with 100% plans, but are not in a Chapter 7.) There is often a minor additional charge for a spouse filing, but it is far less than being charged for a second case.
Will Filing Alone Affect My Spouse?
No, filing will not affect your spouse’s individual credit, but if he or she is jointly responsible on any debt that is not paid, that will affect him or her. The fact that you filed bankruptcy does not appear on a spouse’s credit report unless he or she also files bankruptcy.
Unless your spouse has signed to be legally responsible, they are not responsible. Many credit card companies will argue that she is responsible, just like many young men on a Saturday date will say anything that works. Collectors are often paid a commission, which causes abuse.
They may even put a “no pay” on her credit report if the amount is unpaid; however, she may ask any credit reporting service to correct that. If she does so, the credit card company will have to show that she signed for it. If they can’t, it will be removed from her credit report file. In other words, the credit card collectors may try to collect from her by claiming she is liable, but she is only legally responsible if she signed to be responsible. If they damage her credit record, it may be grounds for a lawsuit.
Will a Personal Bankruptcy Affect My Business?
If you completely own the business, the business is merely your asset. If it has a substantial value, it may belong to the court like any other asset. If the business is co-owned, such as a partnership or corporation, then it becomes almost impossible for creditors to reach assets for your personal debt. You may want to file a Chapter 7 to officially terminate a business that is losing money, but normally you would merely dissolve a failed business without a corporate Bankruptcy. If your business files Bankruptcy, it generally doesn’t affect you unless you are personally responsible for the debts of the business.
What Will Happen to My House and Car?
Usually, you keep them. If your equity is less than or equal to your exemption, you keep the property. You are allowed to keep a certain amount of property in bankruptcy. When we prepare your bankruptcy, we will tell you if you are at risk of losing property. At the time of filing, all property that is not exempt belongs to the court. The idea is to exempt it all so that you keep it all. Of course, the law concerning what property you can keep varies from state-to-state. We provide you with the exemptions in the manual and on our website. If you are in another state, please beware that many of the websites have the amounts wrong and the amounts may not be up to date. We do keep the amounts for our state up to date.
Which Chapter do I fit in?
If you have over $360,475 in unsecured debt, $1,081,400 in secured debt you can’t file a Chapter 13 and must file a Chapter 7 or 11 instead. If you have over 51% of your debt in business obligations you generally automatically file Chapter 7 if they have not filed a Chapter 7 in the last 8 years (this is for 2012 — the amounts are adjusted every 3 years). Generally a Chapter 11 is for a large company with several employees. A Chapter 7 is most often filed by the majority of debtors that have a small amount of property or equity. A Chapter 13 is filed by persons seeking to save a home from foreclosure or an auto from repossession so they can catch up the payments over time. A Chapter 13 can also manage some non dischargeable or priority debts such as taxes.