Filing bankruptcy in Connecticut is a serious decision, but it is also easier than many people may realize. Bankruptcy provides a way to get out of debt while protecting your property. Let’s explore specific information for filing Chapter 7 or Chapter 13 in Connecticut.
Chapter 7 Bankruptcy in Connecticut
Chapter 7 bankruptcy in Connecticut helps individuals and couples who do not have enough money to pay their debts. Your income cannot be above a certain amount to qualify for a bankruptcy discharge (debt forgiveness) in Chapter 7. When the legislature changed the bankruptcy laws in 2005, they included the income test for Chapter 7 to prevent people who could repay some of their debts from abusing the bankruptcy process.
Most no-asset Chapter 7 cases in Connecticut can be completed in about six months. That means that you could get rid of most, if not all, of your unsecured debts in just a few months. However, some debts are not eligible for a bankruptcy discharge. Also, Chapter 7 may not be the best choice for you if you are behind on your mortgage payments or car payments.
Some debts that you cannot get rid of by filing Chapter 7 include student loans, alimony, child support, and most income taxes. If you are behind on your mortgage payments or car loan payments, you must catch up on those payments to keep the property. You can learn more about the Chapter 7 bankruptcy process here.
Chapter 13 Bankruptcy in Connecticut
You may be considering a Chapter 13 bankruptcy in Connecticut. This type of bankruptcy helps wage earners and self-employed individuals reorganize their debts into a repayment plan they can afford. In many cases, a debtor (the person who files the bankruptcy case) can pay just pennies on the dollar to get rid of unsecured debts. Unsecured debts that you can get rid of in bankruptcy include medical bills, credit card debts, personal loans, old utility bills, and most personal judgments.
Through a Chapter 13 plan, you can catch up on mortgage payments to stop foreclosure. You may also be able to lower your car loan payments through a Chapter 13 plan. In some cases, a debtor may even be able to get rid of a second mortgage, if the home is worth less than the person owes on the first mortgage.
A Chapter 13 case helps you protect your property from a Chapter 7 bankruptcy auction while getting rid of debts you cannot pay. However, you are obligated to a 60-month bankruptcy repayment plan. Some debtors might qualify for a three-year Chapter 13 plan. To learn more about Chapter 13 and use Ascend’s Chapter 13 bankruptcy calculator, click here.
Means Testing in Connecticut
As discussed above, you must meet certain income requirements to qualify for a bankruptcy discharge under Chapter 7. Your income is also a factor in how much you must pay each month through a Chapter 13 plan.
The Means Test is a bankruptcy form used to calculate your disposable income. Disposable income is the amount of money you have each month after paying your normal living expenses. Ascend provides more information about the bankruptcy Means Test, including how the Means Test works and a bankruptcy calculator here.
Income used to determine your eligibility for a Chapter 7 bankruptcy case is specific to each state. The median income for each state is calculated by the number of people in the household. The figures for the Means Test are updated periodically to reflect the current median income for households in Connecticut.
Family Size and Median Income State Limits
The current Means Test figures used for bankruptcy cases filed on or after April 1, 2020 are:
|# of People||Annual Income|
For each person over nine household members, add $9,000 per person to the median income level. If your median income exceeds the maximum amount, you might be required to file under Chapter 13.
Connecticut Credit Counseling and Debtor Education Courses
Two bankruptcy courses are required to file for bankruptcy relief. A credit counseling course must be completed before filing bankruptcy. A debtor education course must be filed after the case is filed. If you do not complete each of the bankruptcy courses, you cannot receive a bankruptcy discharge.
You must choose a company for your bankruptcy courses that is approved by the United States Trustee. The UST’s office has a list of companies that are approved to provide bankruptcy courses in Connecticut on its website.
Connecticut Bankruptcy Exemptions
Bankruptcy exemptions are used to protect property from the bankruptcy court and your creditors. By using federal or state bankruptcy exemptions, you protect the equity in your property from being used to repay your debts. Equity is the value of the property after subtracting the amount owed for valid liens against the property.
The federal bankruptcy exemptions are found in the U.S. Bankruptcy Code. However, states are permitted to enact state bankruptcy exemptions. Connecticut has state-specific bankruptcy exemptions. Debtors who file bankruptcy in Connecticut can choose between federal bankruptcy exemptions or Connecticut bankruptcy exemptions.
Choosing between federal or Connecticut bankruptcy exemptions is an important step in filing bankruptcy in Connecticut. The amounts of equity protected by federal and state exemptions differ, so you must choose the set of exemptions that gives you the best protection of assets.
The NCLC has a list of federal bankruptcy exemptions. Common Connecticut bankruptcy exemptions include:
- Homestead exemption – $75,000 (Conn. Gen Stat. § 52-352b(t))
- Vehicle exemption – $3,500 (Conn. Gen Stat. § 52-352b(j)
- Wildcard exemption – $1,000 (Conn. Gen Stat. § 52-352b(r)
Additional exemptions exist by statute, including exemptions for personal property, tools of the trade, and public benefits. The amounts of bankruptcy exemptions are subject to change.
Bankruptcy Courts and Trustees for Connecticut
Connecticut has just one bankruptcy district. All bankruptcy cases filed in the state are filed in the Bankruptcy District of Connecticut. There are three bankruptcy courts located throughout Connecticut:
- Abraham Ribicoff Federal Building, 450 Main Street, 7th Floor, Hartford, CT 06103
- Brien McMahon Federal Building, 915 Lafayette Boulevard, Bridgeport, CT 06604
- Connecticut Financial Center, 157 Church Street, 18th Floor, New Haven, CT 06510
The bankruptcy courts each serve specific counties within Connecticut.
Bankruptcy trustees are assigned to each Chapter 7 and Chapter 13 case filed in Connecticut. The bankruptcy trustees administer the bankruptcy estate. There are eight Chapter 7 bankruptcy trustees in Connecticut and one Chapter 13 trustee. Bankruptcy judges are also assigned to each bankruptcy case.
Alternatives to Filing Bankruptcy in Connecticut
There may be an alternative to bankruptcy that might give you the same debt relief without filing bankruptcy. Ascend is dedicated to helping individuals explore debt relief options to find the best option for them. You can find more information about debt settlement, Comparing Debt Consolidation, and debt management vs debt settlement to help you decide if debt consolidation may be a good option for you.We encourage you to use all of the Ascend tools to explore Chapter 7 and Chapter 13 in Connecticut, as well as other debt-relief options. You may also contact us at Ascend with questions about bankruptcy and debt relief.