Thinking about filing a Chapter 7 bankruptcy in Connecticut, but not sure how it works? Well, we’re here to give you the facts and resources you need. Don’t worry. The process of filing bankruptcy in Connecticut may be easier than you think.
So, what exactly is bankruptcy? In a nutshell, bankruptcy is a way to help you out of debt to give you a “fresh start.” Sounds like something you need? There are two types of bankruptcies that you need to understand first: Chapter 13 and Chapter 7 bankruptcies. This post discusses their differences and provides details specific to Connecticut.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy Connecticut helps regular wage earners and self-employed people reorganize their debt into repayment plans that they can afford. In many cases, Chapter 13 filers pay pennies on the dollar on their unsecured debts. Unsecured debts include medical bills, credit card debts, personal loans, utility bills, and most personal judgments. Chapter 13 plans help you catch up on mortgage payments to stop foreclosures. You may also lower your car loan payments. In some cases, you may even have your second mortgage forgiven if your home is worth less than your first mortgage.
The take-away: Chapter 13 bankruptcy protects your property from a Chapter 7 bankruptcy auction (more on that later) while satisfying debts you cannot pay fully.
What do Repayment Plans Look Like?
Most Chapter 13 repayment plans are 60 months long. However, some filers may qualify for three-year repayment plans. Your income will be a factor in how much you pay each month. Use Ascend’s Chapter 13 bankruptcy calculator to estimate your monthly payments and learn more about Chapter 13 bankruptcies.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy mostly differs from Chapter 13 bankruptcy in that it wipes out most unsecured debt without the filer having to pay into a repayment plan. However, one must meet income requirements to qualify. In addition, you cannot be behind on your mortgage or car loan payments if you want to keep those assets. Otherwise, assets not exempt or abandoned from bankruptcy proceedings may be sold (as through an auction) to meet creditor claims.
Also, not all unsecured debts are eligible for discharge. For example, those not eligible include student loans, alimony, child support, and most income taxes.
The take-away: Chapter 7 bankruptcy wipes out most unsecured debt without a repayment plan. However, it may not protect certain property, such as your home or car, from being sold.
For more info, check out Chapter 7 bankruptcy process.
Do I Qualify for Chapter 7 Bankruptcy in Connecticut?
As discussed above, you must meet income requirements to qualify for Chapter 7 debt forgiveness. However, income eligibility for Chapter 7 bankruptcy differs for each state. In 2005, Connecticut enacted income thresholds for Chapter 7 bankruptcy qualification.
To qualify in Connecticut, you calculate your disposable income through the Means Test using Connecticut’s bankruptcy form. Disposable income is how much money you have each month after paying normal living expenses.
In Connecticut, your Chapter 7 eligibility is based on the number of people in your household and Connecticut’s median income. As of November 1, 2020, Connecticut uses these Means Test figures:
|# of People||Annual Income|
For households with more than 9 members, add $9,000 per person to the median income.
If your income exceeds the maximum amount, you may not be eligible to file for Chapter 7 bankruptcy. However, you can still file for Chapter 13 bankruptcy. For more information on bankruptcy Means Tests, including how they work and calculators, check out these Ascend posts.
Connecticut Credit Counseling and Debtor Education Courses
Connecticut requires those seeking Chapter 13 and 7 bankruptcy relief to take two bankruptcy courses. The first is a credit counseling course taken prior to filing bankruptcy. The second is a debtor education course taken after filing. Filers can’t receive a bankruptcy discharge if they do not complete these courses.
These courses must be taken through course providers approved by the United States Trustee (UST) office. The UST website provides a list of pre-approved bankruptcy courses in Connecticut.
Connecticut Bankruptcy Exemptions
Bankruptcy exemptions can 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.
You can also find the federal bankruptcy exemptions in the U.S. Bankruptcy Code. However, states can enact their own state bankruptcy exemptions. For example, Connecticut has state-specific bankruptcy exemptions, so 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)
There are also exemptions that exist by statute, including exemptions for personal property, tools of the trade, and public benefits. But be careful, as the amounts of bankruptcy exemptions are often subject to change.
Where do I go to File for Bankruptcy in Connecticut?
Unlike many other states, Connecticut has just one bankruptcy district. As such, all bankruptcy cases go through the Bankruptcy District of Connecticut.
Connecticut Bankruptcy Courts
Connecticut has three bankruptcy courts within its bankruptcy district:
- 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 serve specific Connecticut counties.
Connecticut Bankruptcy Trustees and Judges
In addition, 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 for 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.