Bankruptcy is a way for individuals burdened by debt to seek protection from creditors. Once you enter into the bankruptcy process, you will be protected from receiving harassing phone calls from creditors and you will be protected from accumulating interest and late fees. Generally speaking, everything related to the outstanding debts covered by your bankruptcy will be paused, while you and the bankruptcy court develop a liquidation plan and/or repayment plan to reorganize and pay back as much debt as possible.
Depending on what part of Connecticut you live in, you will be required to file in one of three federal courts located in Hartford, Bridgeport or New Haven. It is also important to note that, even though bankruptcy happens in federal court, Connecticut residents will be affected by local Connecticut bankruptcy rules.
In the vast majority of cases, individuals filing for bankruptcy in Connecticut will file under Chapter 7 or Chapter 13. In some respects, Chapter 7 is the easiest type of bankruptcy — if you qualify for it — but it can also be the most traumatic. Indeed, under Chapter 7 you will have to relinquish ownership of many of your possessions, investment and cash to the court. The court will liquidate these assets and use the proceeds to repay as many of your debts as it can.
Fortunately, in Chapter 7, you will not have to relinquish all of your assets. A lot of them (particularly the ones necessary for daily life) will be exempt from bankruptcy and a skilled attorney will exempt as many of your assets as possible. To qualify for Chapter 7 in Connecticut, your monthly income must be at or below Connecticut's median monthly income, or you will have to pass the stringent criteria of a special means test.
Those who cannot qualify for Chapter 7 will likely need to complete the Chapter 13 process, also known as reorganization. However, others may also wish to file for Chapter 13 depending on their debt situation. Under Chapter 13, the court will help you negotiate with creditors to reduce your debts and create a debt repayment schedule. The repayment schedule will typically be subjected to a 36-month time frame for those who fall under Connecticut's mean monthly income, but in limited circumstances payment plans are extended to as long as 60 months. For those over Connecticut's mean, a 60-month repayment plan will generally apply.
Connecticut bankruptcy filers will not lose all of their property in their Chapter 7 proceedings. Indeed, some of your property will be exempt from being possessed and liquidated by the court. In Connecticut, you can choose between using Connecticut's exemption list and the federal exemption list (but you cannot use a mix of both).
The following is exempt under the Connecticut statues:
A bankruptcy attorney's assistance can be invaluable during bankruptcy proceedings. An attorney will help you decide if your debt situation warrants bankruptcy in the first place. In some situations, less involved debt management programs could be a more appropriate match. An attorney can help you decide which is better, Chapter 7 or Chapter 13. Your attorney will also help you protect as many of your assets from being possessed by the court as possible.
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified bankruptcy lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local bankruptcy attorney to discuss your specific legal situation.