Filing Bankruptcy In Connecticut

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Bankruptcy may be the right choice for an individual if they have encountered a major financial setback recently, or if they just cannot find a way to pay the bills. Although it can help drastically, there are downfalls.  Though bankruptcy will help individuals and business get back to financial freedom quicker in most cases, it is a major endeavor. Each form of bankruptcy in Connecticut has its own unique positives and negatives. Deciding what the right choice is should be done with help of bankruptcy attorneys.

Connecticut Bankruptcy Topics

  1. Personal Bankruptcy Options
  2. Keep Your Home: Bankruptcy and Foreclosure
  3. Connecticut Exemptions to Bankruptcy Liquidation
  4. Options for Filing Bankruptcy
  5. Local Bankruptcy Courts and Trustees


Options for Personal Bankruptcy in Connecticut

There are several types of bankruptcy, but almost two thirds of all bankruptcy cases are filed under Chapter 7 in Connecticut, as well as across the nation. The majority of other cases are filed under Chapter 13 by individuals.  

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is accurately referred to as ‘liquidation’ bankruptcy. It is also referred to as a ‘fresh start’ bankruptcy; however, this title is more misleading. Chapter 7 bankruptcy, or any method, will never get rid of all of an individual’s or business’ debts. Chapter 7 will remove most debts from a person, but at serious personal and financial costs. The debtors will lose most of their possessions aside from what is exempt by law, and a large portion of their debts may remain, as they are not dischargeable. Property deemed exempt can be named under federal law and or state law, and in the state of Connecticut, individuals may select from state exemptions, as well as the federal exemptions lists. 

Before even being allowed to continue with filing, debtors must pass a means test to qualify for bankruptcy protection. A means test shows whether an individual is below the median income of the given state. The median income for an individual in Connecticut is $57,505 for single member households, $70,827 for two member households, $85,315 for three member households, $103,408 for households of four, and $6,900 for each additional member.

Chapter 13 Bankruptcy

For individuals looking to maintain their possessions and are possibly capable of paying back all of their debts, Chapter 13 bankruptcy is the better choice. Although it does not actually remove any debts, once filed and granted, a bankruptcy trustee will work with the debtor and their creditors to design a plan to repay all debts of the next three to five years.  Once bankruptcy is filed, all collection action by creditors is halted by law under what is known as an “automatic stay”. This form of bankruptcy is often called ‘wage earner’ bankruptcy, because the debtor needs to have a consistent form on income in order to keep up with the payment plan to pay back his or her debts. An individual also must have no more than $1,010,650 in secured debt or $336,900 in unsecured debt to qualify for this form of bankruptcy. The three to five year limit on repayment is requirement by federal law. Amendments and extensions on the repayment plan may be granted to the debtor by the bankruptcy court in extreme circumstances.

Filing Bankruptcy during Foreclosure

If an individual has received notices of possible foreclosure or impending foreclosure on their home, filing bankruptcy may be a means of stopping the foreclosure process.  Consulting an attorney is essential to ensure this strategy does not produce undesired, detrimental outcomes for the debtor. Both Chapter 7 and Chapter 13 bankruptcy filings may be able to stop foreclosure. If the bankruptcy is filed before foreclosure proceedings commence, the foreclosure is voided. However, if the foreclosure was filed first, the bankruptcy court may allow it to continue.

Connecticut Bankruptcy Exemptions

Exemptions in Connecticut are allowed under state exemptions lists, as seen below, or the uniform federal exemptions list.

Type of Asset(s)

Details on Applicable Exemption(s)

Household

Real estate property or mobile homes up to $75,000

Insurance

Disability benefits, insurance benefits, group benefits, and/or the cash or surrender value of these fiduciary instruments

 

Life insurance benefits from parent, if individual claiming exemptions is child or spouse.

 

Annuity benefits are exempt

Business

Property used as “tools of trade” is exempt

Pension Benefits

Pension benefits of law enforcement officers, judges, teachers, and other municipal workers are exempt.

 

Tax-exempt retirement accounts, including Traditional and Roth IRAs up to $1,095,000 per person

 

ERISA-IRAs, Roth IRAs, Keoghs, and other qualified benefits, but only to the extent wages are exempt

Public Benefits

Workers compensation benefits, social security, welfare, crime victims assistance, and unemployment benefits are exempt assets

Salary

A minimum 75% of earned but unpaid wages or 40 times the state or federal minimum hourly wage; the greater of the two amounts will be used.

Federal

Individuals may elect to file for exemptions under the federal exemption list, in lieu of the state of Connecticut exemptions list.

 

Connecticut Bankruptcy Court Filing Options

Need Bankruptcy Advice?

  • Use a Bankruptcy Lawyer - For those with the means to hire a full time bankruptcy lawyer during their bankruptcy process, the help may be invaluable. Not only will a bankruptcy lawyer provide the knowledge of a trained expert, they provide emotional security. Bankruptcies are extremely trying times, and if the debtor has a bankruptcy lawyer, they can rest assured they are moving through the process in the correct manner.
  • Use a Filing Service - Filing services are not often recommended, as they do not provide any actual legal advice or guidance during a bankruptcy, however, for some it may be the right choice. For people who are very familiar with bankruptcy laws, or for business owners who have more paperwork than the average bankruptcy, a filing service can relieve much stress. However, using a filing service leaves risk of bankruptcy fraud. The debtor will assess his own properties and must do so with utmost accuracy.
  • File “Pro Se” - Filing Pro Se should be a last resort. Filing Pro Se means to file alone without the help of professional legal guidance or a filing service to aid in paperwork. Filing Pro Se adds much stress to an already tenuous situation.

Courts and Connecticut Bankruptcy Trustee Information

Connecticut Bankruptcy Court Main Office

Abraham Ribicoff Federal Bldg and United States Courthouse
450 Main Street
Hartford, CT 06103-3022

Connecticut Bankruptcy Court

Brien McMahon Federal Bldg and United States Courthouse
915 Lafayette Boulevard
Bridgeport, CT 06604-4706

Connecticut Bankruptcy Court

Connecticut Financial Center, 18th Floor
157 Church Street
New Haven, CT 06510-2100

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