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Lexington Bankruptcy Blog

Chapter 7 bankruptcy basics

Medical bills, credit card payments, car notes and mortgage payments can all take a toll on an individual. Many times, these expenses overtake the Kentucky consumer's life and makes one feel as if he or she is simply working to pay bills. However, rather than drowning in this sea of debt, over a quarter of a million Americans found a life raft in filing for bankruptcy, with Chapter 7 bankruptcy being the most popular.

Once one decides that Chapter 7 bankruptcy is the appropriate option, the next step is to file the necessary paperwork. When this happens, the judge will name a trustee to be responsible for liquidating the appropriate assets and paying creditors as funds are available. When this happens, an automatic stay goes into effect, and creditors are stopped from being able to attempt any further contact for collection efforts.

Chapter 13 bankruptcy -- advantages and disadvantages

Like most things, each form of bankruptcy has its advantages and disadvantages. A careful analysis of these, along with guidance from one's legal advisor, can help in determining the best choice for a particular situation. Many Kentucky residents find that filing for Chapter 13 bankruptcy is the appropriate option.

First of all, as long as the individual has the financial resources and can make the designated payments under a court-approved bankruptcy payment plan, the individual can actually keep all property. Although the debts on these items are not discharged, they can be lowered as a part of the repayment plan. This can apply to both exempt and non-exempt property.

Chapter 7 bankruptcy ends fear of the phone for many

For approximately 2,000 individuals daily, the sound of the phone ringing is no longer a nightmare. The reason for this change is that these individuals have decided that it is time to take action and stop debt collectors from calling. Many Kentucky residents fall into this same predicament and make the important decision to make a change and file for Chapter 7 bankruptcy.

One of the most important features of Chapter 7 bankruptcy is that once everything is completed the majority, if not all, of the individual's unsecured debt is discharged. This generally includes credit card debt and other debts that are itemized on the bankruptcy documents. In addition, it may be possible for the individual to retain certain secured debts such as the home or car as long as he or she has the financial ability to reaffirm these debts. Many times, by getting out from under the burden of the unsecured debts, this is possible.

Kentucky Derby trainer files for Chapter 7 bankruptcy

Everything seems to be going as planned. Money is coming in, bills are being paid and life appears to be good. Then, the bottom falls out and something happens to change the rosy picture that had been playing. For some Kentucky residents, life paints a bright picture at first, but then, something happens and debt becomes a problem. Many times, Chapter 7 bankruptcy becomes the bright spot in the ever-changing picture.

Recently, Richard Dutrow, the trainer who won the 2008 Kentucky Derby, found himself facing bleak prospects. In 2011, he was banned from the racing profession for a period of 10 years. Although he appealed this decision, it was upheld and he is prohibited from participation in the sport until 2023. This sudden change in his financial prospects appears to have had a negative impact upon his ability to meet the financial obligations that he had made.

Can you discharge tax debt through bankruptcy?

The federal income tax filing deadline is less than two weeks away. If you have already completed and filed your return, congratulations! You don’t have to worry about the myriad of forms, calculations and deductions relating to it for at least another year. If you have not, hopefully you understand how to extend your filing deadline or at least how to establish a plan to pay your tax debt over time.

However, for some businesses, their debt (including their tax obligations) may be too much for the company to bear and threatens their very existence. In these situations, bankruptcy may be the only viable option. After all, bankruptcy can reduce your debt dramatically and allow you to “start fresh” financially. 

Chapter 13 bankruptcy can take care of the 'if only's'

"If only" can apply to many financial situations. "If only" there was a little more time to pay these debts. "If only" the house was not at risk of foreclosure or the car at risk of repossession. For many Kentucky residents, Chapter 13 bankruptcy is the answer to these "if only" concerns.

Chapter 13 bankruptcy can often give the individual the time needed to catch up on payments and possibly avoid foreclosure or repossession. With this type of bankruptcy, the individual develops a repayment plan that is presented to the bankruptcy court. Depending on the situation, this repayment play can cover a three- or a five-year time period.

Turning tax refund into Chapter 7 bankruptcy relief

The mortgage needs to be paid, the car loan is due, credit cards are past due and medical bills are adding up. Then, there are the everyday expenses such as food and gas. All of this takes money; money which many Kentucky residents find harder and harder to come by. Chapter 7 bankruptcy is often the solution to the problem; however, even this solution requires some money to be able to implement.

Spring is one of the prime seasons for filing bankruptcy. The reason for this is that along with spring showers come spring's income tax return refunds. For those who have paid in more than is owed throughout the year, this money is returned in the form of a refund check. Rather than using this money to pay off bills, some individuals find it more beneficial to use this money to have these bills discharged by means of Chapter 7 bankruptcy.

Cancer can drive a person into bankruptcy

When you're diagnosed with cancer, you're concerned with how progressed the cancer is and what the best treatment options are. There may be months or even years of surgeries, chemotherapy, radiation and other treatments in your future.

Unfortunately, due to our current medical insurance system, there may also be a future of crippling medical debt and even bankruptcy waiting for you as well. Thankfully, when those medical debts become overwhelming, bankruptcy may be able to help you get your life back on track.

What is the purpose of the means test for Chapter 7 bankruptcy?

Consumers in Kentucky who have experienced unanticipated financial hardships due to loss of employment, medical emergencies or other misfortunes may be exploring their options under the Bankruptcy Code. If Chapter 7 seems the best solution for their circumstances, a means test will determine whether they qualify or whether they must file for Chapter 13 bankruptcy. The test will determine whether the consumer has enough disposable income to pay back some of his or her debts.

The means test involves the calculation of the total of all sources of revenue minus all expenses. Certain allowed expenses such as legally obligated payments and health and welfare requirements may be deducted. If the balance exceeds the median income for Kentucky households, the person might have to file for Chapter 13 bankruptcy.

Benefits of Chapter 7 bankruptcy

When one hears the term "bankruptcy," one often associates it with a negative connotation. Many Kentucky residents have learned that this is actually far from the truth. For many, filing Chapter 7 bankruptcy added a positive dimension to a very difficult situation.

Falling victim to spiraling debt happens all too quickly and easily. For some, the downward spiral began with the loss of a job or a medical crisis. For others, credit card debt got out of control, and as interest continued to accumulate, the ability to pay off the debt shrank.