Chapter 7

Hardin County Chapter 7 Bankruptcy Attorneys

Helping Clients Manage Debt Through Bankruptcy in Radcliff, Elizabethtown and Central Kentucky

When you are facing overwhelming debt with little to no means of repaying, it can be easy to become nervous about your future. How will you get on top of your missed payments? Will you lose your home? Why do creditors keep harassing you when you simply do not have the funds to repay them?

Chapter 7 bankruptcy can help you overcome debt you have no means to repay. The process, particularly liquidation, can seem intimidating if you are not familiar with the systems involved, but our Radcliff Chapter 7 bankruptcy lawyers at Musselwhite Staples Hafley & Johnson have over 100 years of legal experience and can help you navigate each step. We have helped countless Kentucky clients build better financial futures and can help you maximize Chapter 7 bankruptcy’s benefits while limiting any consequences in liquidation.

To learn if Chapter 7 bankruptcy might make sense for your situation, schedule a free consultation with our team by calling (270) 351-6032 or contacting us online.

Do I Qualify for Chapter 7 Bankruptcy?

Not everyone will automatically qualify for Chapter 7 bankruptcy. There are two types of consumer bankruptcy, one being Chapter 7, the other being Chapter 13. You will generally be eligible for one or the other depending on your current level of income and your ability to at least partially repay your creditors. Chapter 7 is reserved for lower-income filers, so if you have too much income, you may not be eligible.

To determine whether you qualify for Chapter 7, you will need to complete the Kentucky Means Test. The process involves the following:

• Calculate your monthly income. First, you will need to calculate your average monthly income over the past 6 months. The timeframe is important, as losing a job or another stream of income could dramatically change your most recent average and thereby make you eligible for Chapter 7 bankruptcy.
• Compare your income to the average median in your state. Once you have your average income, you will need to compare it against the average median income for your household size in the state. The average median incomes are adjusted regularly. If your average income is lower than the average median income for your household size, you automatically qualify for Chapter 7 bankruptcy. If your income is equal to or greater than the average median income for your household size, you still may be eligible for filing Chapter 7 bankruptcy, but you will need to undergo the second half of the Means Test. This requires tabulating your disposable income.
• Determine your disposable income. To establish your current level of disposable income, you will need to take your current average monthly income and subtract qualifying expenses needed to reasonably live your life. This can include money for transportation, housing, clothing, food, healthcare, life insurance policies, and some education costs, among other things. Not every expense will qualify, and it is critical you arrive at an accurate number for your disposable income. Our Radcliff Chapter 7 bankruptcy attorneys can help evaluate your estate and make the necessary calculations.

Your level of disposable income will determine your eligibility for Chapter 7 bankruptcy. The point of the exercise is to assess whether you have any means of at least partially repaying creditors. If your disposable income is too low or nonexistent, you will not be able to directly repay, authorizing you to pursue Chapter 7. If you do have a sufficient level of disposable income, you may instead be asked to consider Chapter 13 bankruptcy.

What Is Liquidated in Chapter 7?

When people talk about Chapter 7 bankruptcy, they often grow wary of “liquidation,” the process by which some of your assets are sold (or liquidated) to compensate creditors. While that can sound scary – you do not want to lose all of your property to liquidation – filing for Chapter 7 bankruptcy does not mean you will automatically lose everything. In fact, smart and strategic planning can minimize impacts to your estate during a Chapter 7 filing.

Only your nonexempt assets will be subject to liquidation. Some examples include:

• Secondary or vacation homes
• Second vehicles
• Collector items
• Jewelry
• Expensive accessories or clothing
• Cash, bank accounts, and investments (excluding retirement)

When filing, you will be permitted to use either the federal or state exemption schedules to shield portions of your estate from the process. This can include equity in a home or vehicle, personal property like clothing or furniture, and a majority of unpaid wages, among other things. Every situation is different, but careful leveraging of these exemptions can limit or even eliminate any losses to liquidation.

Do not wait to learn if Chapter 7 bankruptcy could help you overcome debt. Call (270) 351-6032 or contact us online to get started.