Kentucky Personal Bankruptcy FAQs

Bankruptcy is a powerful tool that balances a debtor’s right to get a fresh start against a creditor’s ability to enforce its legal rights under a loan agreement. Filing for Bankruptcy stops collection calls, lawsuits, garnishments, foreclosures, repossessions and even evictions and utility disconnects, giving you the breathing room to make the right decisions for you and your family. Bankruptcy can also help you catch up on late payments to your car or mortgage lender, so you can get back on a good financial track. Once you complete the process, a personal bankruptcy eliminates, or reduces your existing general unsecured debts – you start fresh.

Personal bankruptcy is not a one-size-fits-all solution. Careful consideration must be given to your unique circumstances and your ultimate objectives. The most important decision to make is choosing the right chapter under which to file – Chapter 7 or Chapter 13. In either case, bankruptcy is about fairness. If you don’t make enough and don’t have a lot of equity in your home, a vehicle, or other personal property, you can eliminate credit card balances, medical bills or personal loans with a Chapter 7 filing. On the other hand, if you have a lot of equity in your home, or your household income is above “median income” for a household of similar size, the bankruptcy code presumes that you can pay at least some of your debt, and a repayment plan under chapter 13 is likely the better choice. There are other reasons to choose chapter 13 over a chapter 7.

When choosing between a chapter 7 and a chapter 13, you will have to consider whether or not:

• You have equity in any personal or real property that you want to keep.
• You can afford to pay back some, all, or none of your personal debts.
• You can afford the payments on car or mortgage loans, and installment agreements.
• You can pay your tax debts, student loans, or divorce-related obligations outside of bankruptcy.

A fresh start under a Chapter 7 Bankruptcy means:

• Protecting you and your family from debt collectors, lawsuits, and wage garnishments
• Keeping your home, vehicles, and personal property
• Eliminating old general unsecured debts that are not helping you move forward
• Knowing that your creditors can never come for you after you obtain an order of discharge.

A fresh start under a Chapter 13 Bankruptcy means:

• The end of collection calls, lawsuits, and garnishments.
• The ability to recuperate a repossessed vehicle or to stop a foreclosure sale
• Time to catch up on late payments to your mortgage or car lender
• Paying back only what you can afford over 3 to 5 years, while maintaining a decent standard of living.