Hopkinsville KY Bankruptcy Attorney

Dealing with the stress of financial hardship can be a disheartening experience. When you have an overwhelming amount of debt weighing you down, you may just want to start over and give yourself the opportunity to take charge of your finances. Filing for bankruptcy may be just the opportunity you need when you’re struggling to clear your debt. A Hopkinsville, KY, bankruptcy attorney can explain the process and make sure that you understand all your options.

At the law office of Michael J. Thompson, Attorney at Law, our knowledgeable and compassionate bankruptcy attorneys can dedicate the necessary time to helping you through the process of filing for bankruptcy. We are committed to our clients, keeping them informed on all their options and giving them the guidance and support they need to confidently make the decision that is right for them.

Bankruptcy Laws in Hopkinsville, KY

The state of Kentucky generally follows federal laws for bankruptcy. The area where state law differs the most is regarding exemptions. Individuals who choose to file for bankruptcy can choose between using the Kentucky exemption list or the federal exemption list, but they cannot use both.

There can be a lot of financial relief that comes from filing for bankruptcy. Debts that include medical bills, credit cards, and different loans can be eliminated. However, you should be aware that not all debt can be discharged by filing for bankruptcy. Before making a decision on how to go about handling your debt, it is crucial that you speak to an attorney who is familiar with the laws regarding bankruptcy.

Filing for bankruptcy not only helps get rid of debt, but it also allows for a period of time when creditors cannot legally seek out payments from you or liquidate your property to pay back debts. This is called an automatic stay. Due to the automatic stay period, creditors cannot do things such as:

• Foreclose on your home.
• Garnish your wages.
• Evict you.
• Repossess your property.
• Shut off your utilities.

In that way, you are protected until your case closes.

There are two main types of bankruptcy that debtors can file for: Chapter 7 and Chapter 13. They each do primarily different things, and the one you qualify for depends entirely on your financial status. The means test determines which bankruptcy filing option debtors qualify for. Individuals with a household income that is below the average income where they live are the most likely to qualify for Chapter 7.

Debtors with above-average income may still qualify for Chapter 7 if they have a significant amount of expenses. If the means test determines that you can afford to pay back some of your debt, you may only qualify for Chapter 13. You may need a lawyer in Christian County, Kentucky, to help go over your finances and make sure you qualify for the option you want.

Filing for Chapter 7 Bankruptcy

The main goal for people with debt is to get rid of it, either by paying it off or making it disappear. Filing for Chapter 7 bankruptcy is a viable way to get rid of a significant amount of debt if you can’t afford to pay it all off, but it does come with a slight disadvantage. Once you file, the automatic stay period will begin. This keeps creditors from liquidating your assets but not your court-appointed trustee. Your trustee is allowed to liquidate your assets to pay some of your debts.

Luckily, the state of Kentucky protects certain property from liquidation:

• Home Equity: Kentucky only protects a maximum of $5,000 of home equity from liquidation. Your trustee cannot use your home to pay your debt if the difference between how much it costs and what you owe is less than $5,000.
• Motor Vehicle: For vehicles, up to $2,500 in equity is protected.
• Personal Property: The state of Kentucky protects up to $6,500 in electronics, livestock, pets, furniture, and related items.
• Retirement Benefits: Funds in a pension plan, IRA, 401(k), or other retirement account are all exempt. Also exempt are life insurance payouts, public benefits, and equity.
• Wildcard Exemption: State law allows for the protection of up to $1,000 of property that would otherwise be nonexempt.

Filing for Chapter 7 can often lead to a discharge of all debts, but it is optional. Debtors can choose between debt discharge and reaffirming certain unsecured debts. Discharge also may not apply to all your unsecured debt, and it may not affect the collateral consequences of debt. If your property is being held as collateral because you owe a debt, that is a separate issue your lawyer will have to address.

Filing for Chapter 13 Bankruptcy

Although Chapter 13 is generally for debtors with a higher income, there is still a cap on how much secured and unsecured debt you can have. The exact amounts change yearly and include both current bills due and past due bills. A lawyer may be able to tell you what the exact numbers are and calculate your total debt to see if you still qualify. There are other options you may qualify for if you aren’t eligible for Chapter 13.

Filing for Chapter 13 includes committing to a payment plan to pay back certain allowed claims. Therefore, you must have some form of income to make sure you keep up with payments. The payment plan has to be approved by your trustee and can last as long as five years, depending on how much income you have. During this time, the automatic stay period will remain in effect.

Chapter 13 does not allow for a discharge of debt in the same way that Chapter 7 does. There are specific guidelines that must be adhered to, including sticking to a repayment plan, before a debt discharge can be granted.

Consult With a Hopkinsville, KY, Bankruptcy Attorney

Struggling with debt can be difficult for anyone to do alone, but you have options available to you. All these options can be discussed with one of our bankruptcy attorneys at the law office of Michael J. Thompson, Attorney at Law. Contact us today to get started with a consultation and have all your concerns addressed. We can help you figure out the next steps to resolve your case.