A Brief Guide to Kentucky State Bankruptcy Laws
Before Filing for Kentucky Bankruptcy
All businesses filing for Kentucky bankruptcy need to find legal representation before doing so. Private individuals aren’t required like businesses to, but because of the complexities of Kentucky bankruptcy law many find legal representation appropriate. If you cannot afford an attorney, that doesn’t mean you have to go through your Kentucky bankruptcy alone. Visit this site for a list of pro bono services that may be able to help you for little or no cost.
All private individuals are legally required to get some credit counseling no earlier than 180 days before filing for bankruptcy. Even if all their other forms are correctly filled out, petitioners without certifications for credit counseling will not be granted a personal Kentucky bankruptcy. Visit the U.S. Justice Department for a list of recognized credit counselors.
Filing for Kentucky Bankruptcy
Individuals and businesses may file for bankruptcy at the United States Bankruptcy Court for the Western District of Kentucky, located in Louisville, Bowling Green, Owensboro, and Paducah, or at the Court for Eastern District, located in Lexington, Covington, Ashland, London, Frankfort, and Pikeville.
Many forms are needed to be filled out, on average 30 per first bankruptcy petition. Federal and local forms can be found on this page. Remember too that you will need to pay a fee to file a petition, $306 for Chapter 7, $1046 for Chapter 11, and $281 for Chapter 13. To find out more about the different chapters of Kentucky bankruptcy, continue reading.
Chapter 13 Kentucky Bankruptcy
It can be easy to take on too much debt. Untold multitudes have taken on mortgages they could only afford with a never appearing raise, or have lost jobs when they couldn’t afford not to work. For such individuals or small businesses, Kentucky bankruptcy law might offer a chance at a new start. To be eligible, individuals or businesses must owe less than $800,000 in secured debt or $200,000 in unsecured debt, with secured debt being debt with collateral.
• Chapter 13 and Personal Kentucky Bankruptcy: Individuals who file for Chapter 13 bankruptcy maintain control of their assets. They typically have an income and even have some discretionary funds. The Kentucky bankruptcy court will discuss with the individual and create a a repayment plan, though during the drafting period all debt payment will cease.
• Chapter 13 and Corporate Kentucky Bankruptcy: Because of the debt limit on eligibility for Chapter 13 bankruptcy, only very small businesses are able to file for Chapter 13.
Chapter 11 Kentucky Bankruptcy
Chapter 11 works very similarly to Chapter 13 Kentucky bankruptcy, with the judge working with the bankruptcy filer to create a satisfactory debt repayment plan. The main difference is that only individuals owing more than $800,000 in secured debt or $200,000 in unsecured debt can file.
• Chapter 11 and Personal Kentucky Bankruptcy: Few individuals accumulate enough debt to make filing for Chapter 11 a possibility, though this does occasionally occur. Those that do usually owe a fair amount of property, especially real estate that they may have bought with another house’s debt as collateral.
• Chapter 11 and Corporate Bankruptcy: Chapter 11 is most common among large businesses since for many it is one of the only available forms of bankruptcy. Besides the repayment plan, the business leaders will also work on corporate restructuring with the hope that it will result in a more profitable company.
Chapter 7 Kentucky Bankruptcy
For Chapter 7 Kentucky bankruptcy, there are the most amount of differences between personal and corporate bankruptcy law. However, both types are founded on the action of a debtor’s assets being sold to quickly pay a creditor.
• Chapter 7 and Personal Kentucky Bankruptcy: For Kentucky residents earning less than the Kentucky mean income, or who pass the Kentucky Means Test, Chapter 7 is the best available bankruptcy option. It erases all unsecured debt such as credit card debt, no matter whether the liquidation sales earn enough to pay back said debt.
• Chapter 7 and Corporate Kentucky Bankruptcy: Businesses that don’t appear to have any chance of making a profit in the future should file for Chapter 7 bankruptcy. Asset seizure means operations cannot continue during bankruptcy hearings, and any debt not made up for with these seizures the business is still accountable for by Kentucky bankruptcy law, making starting up again nearly impossible.
The Tax Debt Dilemma
Kentucky bankruptcy law can be wonderful at solving all sorts of debt problems, but not tax debt problems. Kentucky bankruptcy courts simply aren’t equipped by law to deal with most of these problems. Most individuals and businesses’ first choice should be to try to reach a bargain with the IRS instead of reaching out to Kentucky bankruptcy courts.