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.