Refiling Chapter 7 in Kentucky

Learn if Chapter 7 Bankruptcy is an Option You Can Retake

Figuring out what to do when dealing with a lot of debt can be tough, especially in Kentucky. Some people consider filing for Chapter 7 in Kentucky to help them get rid of their debts and start fresh. But here’s the big question: Can you file for Chapter 7 again in Kentucky if you’ve already done it before?

In this article, we’ll break down the rules about bankruptcy in Kentucky. We’ll talk about who can file for Chapter 7 again, what you need to think about, and the steps you might have to take. Knowing how Chapter 7 works in Kentucky can help you make wise financial choices.

Short Summary:

• Chapter 7 bankruptcy offers a fresh start by eliminating most unsecured debts and, sometimes, selling non-essential assets.
• Before filing for Chapter 7 in Kentucky, it’s important to understand the eligibility criteria and legal process, including credit counseling and a meeting of creditors.
• After a Chapter 7 bankruptcy discharge, unexpected events like medical bills, job loss, divorce, tax debt, or co-signed loans can lead Kentucky citizens to consider filing for Chapter 7 bankruptcy again to tackle the accumulated debt.
• Refiling for Chapter 7 in Kentucky involves assessing your financial situation, consulting with an attorney, gathering documentation, and following legal requirements.
• Abusive bankruptcy filings occur when someone exploits the system, leading to consequences such as losing benefits like the automatic stay or discharge.

What is Bankruptcy?

Bankruptcy is a legal way out of a huge debt hole. Imagine you owe more money than you can ever pay back. Bankruptcy is like hitting a reset button on your finances. It’s a court process that helps you deal with your debts. There are different types of bankruptcy, but generally, it allows you to either:

• Repay some debts and have others discharged: You wouldn’t have to pay them anymore.
• Sell some of your belongings to pay off your debts: The court will decide which things you can keep and which ones need to be sold.

In short, bankruptcy can provide a fresh start for debtors.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy liquidates assets to pay off debts and offers a fresh start. Here’s the breakdown:

• Fresh Start: If you’re overwhelmed with debt and can’t see a way out, Chapter 7 helps end most of your unsecured debts. The court can discharge credit card bills, medical expenses, and personal loans.
• Selling Assets: The court appoints a trustee to review your assets (things you own). In some cases, the trustee might sell non-essential assets to pay back your creditors a part of what you owe. Some exemptions protect certain items, such as your car and household belongings, up to a specific value.
• Focus on the Future: Once the court approves your case, most of your unsecured debts are discharged, meaning you’re no longer obligated to pay them. This frees you up to rebuild your finances and move forward.

Note that Chapter 7 bankruptcy doesn’t discharge child support, student loans, or most tax debt.

What are the Key Things to Keep in Mind When Filing For Chapter 7 Bankruptcy in Kentucky?

Filing for Chapter 7 in Kentucky begins a legal process to relieve overwhelming debt. Here’s what happens when you start a Chapter 7 bankruptcy filing:

• Eligibility Check: First, you’ll need to determine if you qualify for Chapter 7 bankruptcy under Kentucky’s laws. To file for bankruptcy, you must pass a “means test” that assesses your income and expenses.
• Filing the Petition: If you meet the eligibility criteria, you’ll need to fill out a petition for Chapter 7 bankruptcy and submit it to the bankruptcy court in Kentucky. This petition provides an in-depth view of your financial status, including your income, assets, debts, and expenses.
• Automatic Stay: Once your petition is filed, an “automatic stay” goes into effect, which halts most collection actions by creditors. This means creditors must stop contacting you, and any ongoing lawsuits, wage garnishments, or foreclosure proceedings are paused.
• Credit Counseling: Before your bankruptcy case can proceed, you must complete a credit counseling course from an approved provider. This course aims to help you understand your financial situation better and explore alternatives to bankruptcy.
• Meeting of Creditors: Approximately 20 to 40 days after filing your petition, you’ll attend a meeting of creditors, also known as a “341 meeting.” During this meeting, you’ll answer questions about your finances under oath, and your creditors have the opportunity to ask questions or raise objections.
• Asset Liquidation: In Chapter 7 bankruptcy, a trustee may sell certain non-exempt assets to repay your creditors. But, Kentucky bankruptcy laws provide exemptions that allow you to protect essential assets like your home, car, and personal belongings.
• Debt Discharge: If everything goes and there are no objections from creditors, you’ll receive a discharge of your qualifying debts, within a few months of filing. This discharge means you are no longer obligated to repay those debts.

What are the Circumstances Leading to Refiling Chapter 7 in Bankruptcy?

Even after a Chapter 7 discharge, life throws curveballs, and sometimes debt can pile up again. Below are some common reasons why someone in Kentucky might consider refiling for Chapter 7 bankruptcy:

• Unexpected Medical Expenses: Medical bills are a leading cause of bankruptcy, and even with past debts discharged, a new illness or accident can create a fresh wave of overwhelming debt.
• Job Loss or Income Reduction: Losing your job or facing a significant pay cut can make it impossible to keep up with post-bankruptcy financial obligations, leading to a renewed debt crisis.
• Divorce or Separation: Divorce can be devastating, with increased living expenses and potential division of debt. If the financial burden becomes unmanageable, refiling for Chapter 7 might be an option.
• Accrued Tax Debt: While Chapter 7 doesn’t erase most tax debt, new tax liabilities can accumulate due to unforeseen circumstances, leading to the need for another bankruptcy filing.
• New Debt Obligations: Sometimes, people take on new debt after a Chapter 7 discharge, such as student loans or co-signing on a loan for someone else. If these debts become unmanageable, refiling could be considered.

How Do I Refile For Chapter 7 Bankruptcy?

Refiling for Chapter 7 in Kentucky involves several steps to navigate the legal process:

• Assess Your Financial Situation: Before considering refiling for Chapter 7 bankruptcy, take a close look at your finances. Determine if your situation has changed since your previous bankruptcy filing and whether Chapter 7 is the best option for your current circumstances.
• Gather Documentation: Collect all relevant financial documents, including income statements, bank statements, tax returns, and a list of your debts and assets. Having this information organized will streamline the refiling process.
• Complete Means Test: If it’s been less than eight years since you last filed Chapter 7 bankruptcy, you must show that you still qualify by passing the means test. This test looks at your income compared to the average in Kentucky and sees if you have enough extra money to pay your debts.
• Review Changes in Circumstances: Consider any significant changes in your financial situation since your previous bankruptcy filing.
• Attend Credit Counseling: Depending on the circumstances of your previous bankruptcy filing, you may need to complete credit counseling before refiling for Chapter 7 bankruptcy. This counseling aims to provide financial education and explore alternatives to bankruptcy.
• File Petition with the Bankruptcy Court: Once you’ve completed the necessary preparations and documentation, file a new petition for Chapter 7 bankruptcy with the bankruptcy court in Kentucky. Ensure that all required forms are completed and submitted.
• Attend Meeting of Creditors: Like in the initial filing, you’ll need to attend a meeting of creditors, where you’ll answer questions under oath about your financial situation. Creditors have the opportunity to raise objections or seek clarification during this meeting.
• Asset Liquidation and Debt Discharge: If your refiling is successful and there are no objections from creditors, the bankruptcy trustee may liquidate any non-exempt assets to repay your debts. Once completed, you’ll receive a discharge of your qualifying debts, providing you with a fresh financial start.

Reapplying for Chapter 7 bankruptcy in Kentucky means you need to think hard about your money situation and follow all the rules.

What are the Alternatives to Chapter 7 Bankruptcy Refiling?

After Chapter 7 bankruptcy, you must wait before filing again. In Kentucky, you can consider these alternatives to handle your debt without filing again:

Debt Consolidation:

• Streamline Payments: Merge many debts into a single loan with a lower interest rate. That simplifies your repayment process with one monthly payment.
• Consideration: Qualifying for a good interest rate on a consolidation loan might need decent credit, which could be a challenge after a bankruptcy filing.

Debt Management Plan (DMP):

• Legal Help: A non-profit credit counseling agency can negotiate with your creditors on your behalf. They might be able to lower your interest rates and create a manageable repayment plan.
• Fees: There might be a small monthly fee associated with a DMP.

Negotiate with Creditors:

• Communication is Key: Contact your creditors and explain your financial hardship. They might be willing to lower your interest rates or work out a payment extension.
• Success Varies: The willingness of creditors to negotiate depends on your situation and their policies.

Increase Your Income:

• Boost Your Earning Power: Look for ways to increase your income. This extra income can help you chip away at your debt faster.

Budgeting and Spending Management:

• Track Your Finances: Create a detailed budget to track your income and expenses. Identify areas where you can cut back on unnecessary spending.
• Focus on Your Needs: Focus on paying for essential expenses. Develop a plan to tackle your debt after covering basic needs.

Consider Chapter 13 Bankruptcy:

• Repayment Plan: Chapter 13 involves creating a court-approved repayment plan to repay all or a part of your debt over three to five years.
• Eligibility: Income limitations might apply for Chapter 13, unlike Chapter 7. You can file Chapter 7 again anytime after your previous case closes. But, if you do so within four years of the initial filing, you won’t be eligible to have your debts discharged at the end of the new case.

When are Many Bankruptcy Filings Abusive?

An “abusive bankruptcy filing” happens when someone files for Chapter 7 bankruptcy but doesn’t pass the means test. It can also mean using bankruptcy to avoid paying creditors or delaying things like foreclosure.

The court doesn’t like it when people file for bankruptcy without planning to go through with it. If someone does this, they might lose out on benefits like protection from creditors or getting rid of their debt.

Call Our Kentucky Bankruptcy Attorney Now!

Understanding how to refile for Chapter 7 bankruptcy in Kentucky means knowing about certain waiting times and things to think about. To determine the best course of action for your specific needs, consulting with a Kentucky bankruptcy attorney is important.

At Farmer & Wright, PLLC in Paducah, KY, we understand how tough debt can be. We’re here to help you find a way out. Our bankruptcy firm offers free consultations to talk about your situation and look at options like filing for Chapter 7 again or finding other solutions.

Contact Farmer & Wright, PLLC today and take the first step toward a brighter financial future.