For those who feel they are drowning in debt, federal law offers a lifeline: bankruptcy. Chapter 7 bankruptcy is the more traditional wiping away of debts that most people think of when they hear the word "bankruptcy" It involves liquidation, or selling, of assets to pay creditors as much as possible. With Chapter 13 bankruptcy, debts are not erased, but reorganized, and a payment plan is developed to pay creditors over a period of time.
While bankruptcy is a right protected by federal law, Connecticut residents should be aware of key facts pertaining to filing in that state.
Filing for Bankruptcy in Connecticut
Connecticut has three districts for filing bankruptcy, located in Bridgeport, Hartford and New Haven. Where you file depends on where you live. You can look up your filing district on the United States Bankruptcy Court for the District of Connecticut's website (http://www.ctb.uscourts.gov/filing_locations.htm).
Who Can File for Chapter 7 Bankruptcy?
Your eligibility to file Chapter 7 bankruptcy depends on your income. If your average monthly income is less than Connecticut's median income, then you're eligible to file Chapter 7. If your average monthly income is greater than or equal to Connecticut's median income, then you're not eligible to file Chapter 7 unless you pass a stringent means test.
How Long Does a Chapter 13 Plan Last?
Likewise, the length of time a payment plan lasts under Chapter 13 depends on your income. If your average monthly income is less than Connecticut's median income, then your Chapter 13 Plan cannot exceed 36 months, unless the bankruptcy court finds good cause to extend the plan up to a maximum of 60 months. If your average monthly income is greater than or equal to Connecticut's median income, then your Chapter 13 Plan generally must be 60 months in length.
Do I Get to Keep My Property?
Connecticut, like other states, has outlined certain exemptions, or property you get to keep when you file bankruptcy. Connecticut bankruptcy filers can choose between the state's list of exemptions or the federal list, but you have to choose one and stick to it, no mixing and matching. Both include exemptions for:
- Clothing, appliances and household goods, jewelry, and other personal items
- Health aids
- Life insurance and retirement accounts
- Alimony and child support
- Items necessary for your occupation
- Public assistance, Social Security, disability and other benefits
Federal and state laws differ, however, in the values for certain exemptions. For instance, federal law offers exemptions for real estate property valued up to $21,625 (double the amount if married and filing jointly) and a motor vehicle valued to $3,450. Connecticut offers exemptions for owner-occupied real estate valued up to $75,000 ($125,000 in cases arising out of hospital debts) and a motor vehicle valued up to $3,500.
A Personal Bankruptcy Lawyer Can Help
Bankruptcy laws in Connecticut can be complicated. For more detailed, specific information relative to your current position, please contact a Connecticut bankruptcy lawyer.