What Is a Kentucky Bankruptcy?

Every state and territory in the United States has at least one branch of the federal bankruptcy court system. Business owners and private citizens alike have to right to file a Kentucky bankruptcy if they truly cannot pay their financial obligations as promised. Since 2005, it has become much harder for residents of any part of the United States to file bankruptcy. Due to widespread abuse of the bankruptcy code, then-President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA.)

Before filing a Kentucky bankruptcy case, you must complete a session of credit counseling with a government-approved organization. Also, before a judge will finalize or discharge your case you must attend another credit counseling session. You must prove compliance with these federally-mandated requirements through providing a copy of your session completion certificate.

Chapter 7 allows permanent forgiveness of most of your already-existent debts such as credit card and medical bills. But to file this type of Kentucky bankruptcy case, you must economically qualify.

As of 2013, a single Kentucky resident who earned no more than $39,209 annually qualified for Chapter 7. The head of a four-member Kentucky household would automatically qualify if he earned no more than $66,409 per year.

What happens if you earn more money than these guidelines? You can protest the eligibility requirements by completing a worksheet that proves you cannot reasonably repay your creditors and cover basic living expenses. By the way, cable television and Internet bills are not considered basic living expenses by any branch of the United States bankruptcy court.

In most situations, you’ll either have to file a Chapter 13 Kentucky bankruptcy case or find another option for not paying your debts as promised. Chapter 13 creates a partial debt repayment plan that lasts three to five years; you cannot legally get any new credit during the repayment plan without a judge’s permission.

Regardless of your financial situation, you cannot include the following debts in any type of Kentucky bankruptcy.

1. Local, state, or federal income tax bills incurred less than three years before filing bankruptcy.
2. Past, current, or future child support and alimony.
3. Court fines, restitution, or any lawsuits related to your criminal acts such as drunken driving or fraud.
4. Federally-backed student loans, unless you can prove a serious financial hardship due to your significant medical disability or another unavoidable situation such as your college going out of business.

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