Kentucky Bankruptcy Laws should be known by every resident of the state of Kentucky. In 2005, a new law was passed to properly screen applicants for bankruptcy protection. This law also applies to Kentucky bankruptcy laws specifying the need for bankruptcy protection applicants to undergo a credit counseling program to ensure that this is their last option to recover from staggering debts. The aim of this new law is to give other viable options to debtors and not make an uninformed decision to file for bankruptcy.
If and when the debtor decides to pursue bankruptcy, it is his responsibility to know the basics of the bankruptcy laws of Kentucky. He may elect an attorney to help with the proceedings or he may choose to do it on his own. If the debtor chooses the latter, then he should have an in-depth understanding of the processes involved in bankruptcy application.
The most important part the debtor should familiarize are the types of bankruptcy protection to avail. The first and most common choice that most debtors apply for is Chapter 7 bankruptcy protection program. To be eligible for this program, your income would be one of the bases. It should be less than the median income level set by the state based on the current US Census Bureau data. In the event that it poses higher than the median income, you can opt for the second bases. A trustee randomly selected by the bankruptcy courts will computer your monthly obligations including mortgages, credit card bills, and household expenses for the last 6 months and check if you can afford to dispense $100 a month to pay your creditors. If it is not enough, then you are eligible to file for Chapter 7.
For those debtors who have just stumbled upon a rocky path, in a normally smooth ride, the other option is to file for Chapter 13 bankruptcy protection program. Unlike the previous program where your assets are in danger of being confiscated by the bankruptcy courts, this program does not have to implement those strictures. And as much as you would like to eliminate your debts in one instance, this program does not allow you to do that, instead it gives you the chance to pay your debts in staggered amounts lasting up to 3 to 5 years as mandated by the court. This is possible through a repayment plan proposed by the debtor together with the assistance of the trustee randomly assigned to the case. Once this repayment plan has been approved by the bankruptcy court, it will be implemented with the trustee collecting your monthly dues for the next 5 years and remitting this to the creditors whom you owe.
Aside from the meager federal exemptions, each state has their own property exemptions. Kentucky bankruptcy laws provide for more generous exemptions taking into consideration the welfare of their ordinary citizens. The following exemptions apply to the state of Kentucky:
• Your home provided it is only up to $20,200;
• A single vehicle worth up to $3,225;
• Household goods amounting to a total of $10,775, and should be equal to or less than $575 per item;
• Jewelry amounting to $1,350;
• Tools of trade worth $2,025;
• Any property selected by the debtor worth $1,075; and
• Other benefits including public compensation or benefits, health aid, life insurance and child support.
Every debtor should also know that the cost of the administrative expenses necessary for the approval of your petition would cost hundreds of dollars. For the state of Kentucky, the only consolation may be that you can pay it in an installment basis.