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Filing for Chapter 7 bankruptcy

In 2005, Congress changed details in the U.S. Bankruptcy Code, which some financial experts believe was an attempt to bar the way for some consumers to file for bankruptcy. Here in Kentucky and elsewhere in the nation, the value of Chapter 7 bankruptcy cannot be overstated for individuals, families and businesses facing serious debt. However, it is important for anyone thinking of filing to understand the criteria for qualification.

The Bankruptcy Abuse Prevention and Consumer Act, (BAPCPA) requires anyone filing for Chapter 7 bankruptcy to meet criteria, including falling below the median income for an individual's state of residence. That individual must also pass a test referred to as a "means" test, which is meant to determine whether the amount of debt accrued is enough to qualify for bankruptcy. While the wealthy could once file for bankruptcy, the income cap has relegated filing to those trending toward poverty.

There are also still several deterrents keeping people from filing even when they need to. For some, it is the negative stigma or fear of damage to their credit scores, while for others, the fear of mounting legal fees keeps them from taking this step. However, many experts agree that the current economic climate makes Chapter 7 an even more important tool than ever for those suffering from high levels of debt.

Chapter 7 bankruptcy liquidates assets to pay down creditors, stops calls from collection agencies, and even allows some Kentucky residents to keep certain exempt property after filing. In turn, the move wipes away existing debts, forgiving some and paying off others. This gives individuals, families and businesses struggling with debt a lifeline that allows them to recover financially and move forward positively.

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Law Office of Ginger C. Cord, PSC
155 E. Main Street
Suite 330
Lexington, KY 40507

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Phone: 859-963-2073
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