How to File for Bankruptcy in Kentucky

Kentucky has been one of the harder-hit states in America’s economic recession, with nearly 25,000 bankruptcy filings in 2009.  It is likely that others are wondering if bankruptcy is the right choice for them, so it is important to examine that option carefully, especially after recent reforms have made it more difficult to meet a “means” test limiting those who qualify for Chapter 7 bankruptcy.  It is wise to consult a bankruptcy attorney early in the process to ensure appropriate choices for their situation.

Finding a Bankruptcy Attorney

Choosing the right bankruptcy attorney is an important step, and filers can often try several processes to do so:

• Local Bar Association recommendations
• Trusted legal websites
• Referrals from friends
• Personal interviews with a number of possible candidates
• Carefully reviewing their experience and track record, as well as their written statement of costs and methods of operation

Bankruptcy Options

Often, individuals and families find that either Chapter 7 or Chapter 13 is the best of the 6 types of bankruptcy available.  In fact, Chapter 7 is chosen 76% of the time in Kentucky.  There are good reasons for either option, however:

• Chapter 13 is often chosen by those with a regular income and property they do not want subject to liquidation.  Bankruptcy helps reorganize the debtor’s finances and obligations, compiling a plan to repay all debts at lower monthly payments lasting three to five years.
• Chapter 7 is the most complete and straightforward process, especially for those with few assets.  It may require liquidation of some assets that are non-exempt, but in the end, most consumer debt is dismissed, or erased.

Kentucky Exemptions

The law allows those filing for Chapter 7 bankruptcy to claim certain exemptions, protecting necessary property and income from liquidation.  Both federal and state exemptions exist, but Kentucky law allows only state exemptions, such as:

Filing the Petition

Once the type of petition and exemptions are chosen and the required credit counselling is completed, the debtor and their lawyer file the bankruptcy petition with the court, which puts a temporary stay on all collection processes.  The bankruptcy trustee then administers the procedure, calling a mandatory 341 meeting with creditors to outline the final plan and answer any questions.  If the bankruptcy is approved, the debtor is either substantially debt-free, or working towards being debt free through their Chapter 13 repayment plan.