The Process of Bankruptcy in Kentucky

Bankruptcy Attorney in Franklin, KY

Many people are familiar with the experience of needing more money to pay bills, rent, or put food on the table at some point in their life, or feeling as though there isn’t a lot of extra cash for unnecessary expenditures. But while being strapped for cash may be familiar, common, and even a part of growing up, being so destitute that creditors are constantly calling, bills have gone unpaid for months, and mail is pouring in threatening things like asset seizure, foreclosures, or other legal actions isn’t. If you are a citizen of Franklin, where nearly 15 percent of families live below the poverty line, struggling with serious amounts of debt can be a very scary, familiar, and worrisome experience.

Bankruptcy Alternatives and Options

Bankruptcy is one way to manage debts and, to some extent, get a clean financial slate moving forward. But bankruptcy is not the only method of debt management, and if you are terrified of what may happen if you don’t take action quickly to get your debt under control, meeting with a bankruptcy attorney in Franklin who can explain these options is important. Alternatives to bankruptcy might include:

  • Taking advantage of state and federal debt collection laws to put harassment from creditors to rest;
  • Negotiating with creditors/creating a repayment plan;
  • Taking credit counseling classes;
  • Forming a comprehensive budget; and
  • Refinancing a mortgage or other loan.

Bankruptcy is a legal process that has serious repercussions, and while it can be very beneficial, it is important to remember that bankruptcy is a last resort, and that other options should be explored first.

Do I Get to Keep My Property If I File for Bankruptcy?

One of the most pressing questions that those who are considering bankruptcy in Franklin have is whether or not they will be able to keep their property if they file for bankruptcy. Whether or not you will be able to keep your property depends on the type of bankruptcy you decide to file (Chapter 7 or Chapter 13), as well as different bankruptcy exemptions.

A bankruptcy exemption refers to the property or assets that are “exempt,” or protected from creditors when you file for bankruptcy. For example, Kentucky recognizes a homestead exemption for homes that are used as a residence of up to $5,000, a motor vehicle exemption of up to $2,500, and exemptions for certain types of personal property, pensions and retirement accounts, insurance, and more.

Filing a Bankruptcy Petition

In order to file for bankruptcy in Kentucky, you will need to complete and file a bankruptcy petition. The bankruptcy petition can be complex, as you will need to provide detailed information about your finances. The forms include difficult questions that you may not know the answer to without working with a Franklin bankruptcy attorney, including things such as:

  • Are your debts primarily consumer debts?
  • How many creditors do you estimate you owe?
  • How much do you estimate your liabilities to be?
  • How will you pay the bankruptcy fee?

This is just a brief glimpse into some of the dozens of questions included in a bankruptcy petition. In addition to the petition itself, you will also need to include a number of schedules that contain pertinent information about your finances, a means test form, and numerous other lengthy and detail-oriented documents. It is essential that you file your documents in the correct bankruptcy court.

Mandatory Credit Counseling Requirement

Another important thing to know about filing for bankruptcy is that before you file, you are required to attend mandatory credit counseling. This is a federal requirement. You cannot file for bankruptcy if you do not show proof that you attended credit counseling within the past six months (prior to filing), and that the credit counseling was provided by an approved agency. Before you can have any of your debts discharged via bankruptcy, you will also be required to take a debtor education course. While there are some exceptions to these mandatory classes, they are rare. If you are unsure of whether or not you qualify for an exemption, speak with your lawyer.

What Does a Bankruptcy Lawyer Do?

While you are not required to work with a Franklin bankruptcy lawyer if you are filing for bankruptcy in Simpson County, an attorney can expedite and clarify the process, and provide you more information about the advantages and repercussions of filing for bankruptcy. A bankruptcy lawyer has many roles throughout the process, including:

  • Reviewing your finances, assets, liabilities, and income;
  • Exploring all options, including bankruptcy and alternatives to bankruptcy;
  • Determining type of bankruptcy you should file for and why;
  • Filing of bankruptcy petition and gathering of all documents related to bankruptcy filing;
  • Deciding filing date;
  • Communicating with you during the bankruptcy process;
  • Representing you in meetings with creditors;
  • Representing you during your bankruptcy hearing; and
  • More.

Bankruptcy is a legal process, and a complex one at that. Failure to work with an attorney could result in missteps along the way, leading to greater financial loss or other consequences.

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