Kentucky Bankruptcy Laws: What are the Laws Regarding Bankruptcies in the State of Kentucky?
There will be times when you face dire financial situations, which you can only resolve by declaring bankruptcy. You started a business, as you believed it could change the world, only to find out that it takes a lot to sustain as a company. Your spouse or family member had to undergo an immediate medical treatment, which cost you thousands of dollars.
When facing immense financial difficulty, the most common method to get out of all your debts is to file for bankruptcy. It is a legal process where you declare that you don’t have the means to pay your current bills so that you can get a fresh start.
Once you file for bankruptcy, the creditors can no longer seek to collect your debt, or they have to wait until you sort out your financial situation. Today, you will get to learn about the laws regarding bankruptcies in the state of Kentucky.
How many types of bankruptcy exist?
The state of Kentucky understands that there are four types of bankruptcies – Chapter 7, Chapter 11, Chapter 12, and Chapter 13. Out of all of them, the most common ones that individuals file for are Chapter 7 and Chapter 13.
Also known as straight or liquidation bankruptcy, it is a type where you give up your properties, in exchange for removing your debt. However, there are several exemptions which come under both state and federal law.
When you file for Chapter 7, it gives you the opportunity to start fresh financially. The debts you have to repay will be the ones for secured assets for which you signed “Reaffirmation Agreement.” As a result, the creditors won’t be able to continue with their wage garnishment and collection efforts.
Once you file for bankruptcy, all the wages except inheritance will be yours to keep. It will take anywhere between three to six months for the state to discharge your case.
Businesses and individuals who have significant amounts of assets/income and want to restructure them for debt repayment can file for Chapter 11. The creditors can reject or accept the plans of the debtor, which must receive approval from the court.
Available to family fishers and farmers, Chapter 12 will provide bankruptcy relief to these individuals. There are numerous conditions you must fulfill to qualify for this option. For instance, a portion of your income should come from fishing/farming operations. Also, you should come up with a plan to repay your creditors, which should receive approval from the court.
Commonly known as “debt adjustment,” it is a type of debt repayment option available to individuals. Even if you are a sole proprietor to a business, you can file for chapter 13. If you can afford to make the repayments, you get to keep both non-exempt and exempt property. While it doesn’t discharge your debts, unlike Chapter 7, it reduces the amount you have to pay.
How to file for bankruptcy in Kentucky?
You can head to the U.S Courts form page, where you can download the necessary applications. After you complete them, you need to pay a filing fee or request to waive the amount, while submitting your documents in Kentucky bankruptcy court.
The amount you have to pay depends on which type of bankruptcy you file for under the state of Kentucky. Keep in mind these rates can change so always make sure you check with U.S Courts so that you are up-to-date. According to current data, these are the fees you should pay to file for bankruptcy:
Chapter 7 - $335
Chapter 11 - $1,717
Chapter 12 - $275
Chapter 13 - $310