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690 Flatbush Avenue, West Hartford, CT 06110-1308

27 Holmes Avenue, Waterbury, CT  203 756-6100

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690 Flatbush Avenue West Hartford, CT  06110-1308

860 236-9350             800 856-6400  toll free     860 523-9101  fax

27 Holmes Avenue Downtown Waterbury 203 756-6100

 

Chapter 7 Bankruptcy Information

Bankruptcy and Your Property

Your Home and Your Car in Bankruptcy

Filing Chapter 7 Bankruptcy

Debts Chapter 7 Bankruptcy Does Not Cancel

Chapter 7 Bankruptcy Procedure

Hartford Bankruptcy Attorney - Chapter 7 Credit Card Debt Relief

(Numbers in blue refer to Bankruptcy Code sections.)

    Chapter 7 Bankruptcy is probably what most people think of when they hear bankruptcy.  A successful Chapter 7 case provides debt relief by discharging (canceling) all of your debts, including credit card debt, that can be cancelled through bankruptcy.  (Certain debts, such as child support, alimony, and recent taxes cannot be cancelled.)  §523

     As soon as you file bankruptcy, your creditors (the companies and people you owe money to) have to stop trying to collect their debts.  They cannot call you, send you letters, start or continue foreclosure or other lawsuits, garnish your wages, take your property, or do anything else.  You are protected from your creditors and their lawyers and collection agencies by an order from the bankruptcy court, called the Automatic Stay, that enters as soon as you file for bankruptcy, to provide you with immediate debt relief.  §362

    The bankruptcy court sends a notice of the Automatic Stay to your creditors.  Your creditors can only try to collect their debts by filing papers (called a Motion for Relief from Stay) in bankruptcy court asking permission.  The bankruptcy court can only give them permission under certain circumstances (for example, your mortgage lender can get permission if do not make your mortgage payments after you file bankruptcy).  §362

    The other form of personal bankruptcy commonly filed by consumers to get debt relief is Chapter 13 Bankruptcy.  Chapter 13 is filed by persons who want to save a home or a car by getting caught up on their payments.  Chapter 13 may also be filed by persons whose income is too high to meet the Bankruptcy Means Test.  (Read about the differences between Chapter 7 and Chapter 13 bankruptcy.)  §707(b)

    Unless required under the Means Test, Chapter 13 is usually not filed by people with mainly credit card debt. 

Your Property After You File Bankruptcy

     Most people who file Chapter 7 bankruptcy keep all their property.  The bankruptcy law allows you  to keep certain types of property up to a certain value for each type.  Most people who file personal bankruptcy do not have much property and what they do have is protected by either federal law or Connecticut law.  The procedure for protecting what you have is called exempting property.  (To know what property you can keep under federal law, see the exemptions section of the FAQ page.)  §522(d)

    Our experienced Connecticut bankruptcy lawyers can help you decide whether to use the exemptions under federal law or under Connecticut law.  We will provide you with the necessary bankruptcy information to tailor your bankruptcy filing to your specific need for debt relief.

    For example if your home has substantial equity (the amount your property's value is more than the mortgage balances) and you mainly have credit card debt, you may be able to discharge all your credit card debt and keep up to $75,000 in equity if you file bankruptcy singly and up to $150,000 in equity if you file jointly with your spouse.  (If you used federal law, the exemption amounts would be $22,975 and $45,950.)  However, by using the Connecticut exemptions, you may lose other exemptions that you would have under federal law.  

Your Home and Your Car When You File Bankruptcy

     If you own a home and are behind with your mortgage payments, Chapter 7 will not help you save your home.  If you cannot get caught up very quickly, you will have to file a Chapter 13 Bankruptcy and get caught up with a payment plan lasting 3 to 5 years.

     If you own a home and are up to date with your mortgage payments, but have other debt that you want to cancel (such as charge cards or medical bills), you may be able to file Chapter 7 and still keep your home under the following circumstances:

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You can use the exemption that applies to a home (it is called the homestead exemption) to keep your home if your home’s equity (the difference between the value of your home and the total of all the mortgages against your home) is less than the exemption amount.  §522
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You can choose either federal or Connecticut exemptions.
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The federal amount is $22,975 and the Connecticut amount is $75,000.

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If a husband and wife file bankruptcy together, the amounts are doubled.  This means, for example, that a couple generally would be able to keep a home worth $300,000 if the total of their mortgages is $150,000 or higher (if they use the Connecticut exemption).

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To keep your home in bankruptcy, you have to sign a reaffirmation agreement with the bank.  This is an agreement that makes you responsible for paying your mortgage debt even though you have filed bankruptcy.  This can be risky because if later you fall behind with your mortgage and the amount you owe is more than your house is worth, the bank can come after you for the difference.

        The same thing applies to how a car loan is handled under bankruptcy law.
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If you are behind with your car payments, you can choose to file a Chapter 13 Bankruptcy to get caught up.

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You can reaffirm the car loan and keep the car.
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You will continue to make monthly payments on the loan.

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The amount and number of your monthly payments may be adjusted for you to get caught up with the amount that you are behind on the loan.

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The loan amount may be adjusted to reflect the present value of the car if your loan is more than 2½ years old.

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You will still owe the loan company the amount of the loan despite having filed bankruptcy.

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You are taking a risk because if your car should be totalled or stolen in the future, you will still have to finish making the loan payments if you owe more than the salvage value of the car.

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You can also keep the car under bankruptcy law by paying the amount you owe (called redeeming).
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You may be able to take out a new loan to pay off your existing loan.

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If you have had your car loan for more than 910 days (2 ½ years) old, you may only have to pay the value of the car rather than the full amount of the loan. 

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You may be able to keep your car, without reaffirming or redeeming, just by continuing to make your payments on time.  As of October 2009, Connecticut state law provides that filing bankruptcy shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle.  CGS 36a-785.

Filing Chapter 7 Bankruptcy

     Not everyone can file Chapter 7 bankruptcy to get debt relief.

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You cannot file if you had a bankruptcy case dismissed during the last 180 days (about 6 months) for willful failure to obey bankruptcy court orders or to prosecute the case (move the case along).  §109(g)

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You cannot file if you asked for a bankruptcy case to be dismissed during the last 180 days (about 6 months) and a creditor had filed a motion for relief from stay§109(g)

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You cannot file if you received a previous discharge in a Chapter 7 bankruptcy during the last 8 years or in a Chapter 13 bankruptcy during the last 6 years (unless you paid all your unsecured debt or at least 70% and that was the best you could do).  §727(a)

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You cannot file if your income is too high to meet the new Means Test put into place by the new bankruptcy law, the 2005 Bankruptcy Act§707(b)
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You only have to be concerned about the test test under the new bankruptcy law if your annual household income is above the Connecticut median ($102,124 for a household of 4;  $58,529 for a household of 1, as of November 1, 2009).

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If you do not meet the Means Test, you can file a Chapter 13 Bankruptcy to get debt relief.  A Chapter 13 bankruptcy will require you to pay some or all of your unsecured debt over 3 to 5 years.

Debts Chapter 7 Bankruptcy Does Not Cancel

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Credit card or other debt obtained by fraud or false pretenses.

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Recent cash advances.

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Recent purchases of luxury goods.

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Those debts not listed in your schedules.

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Alimony and child support.

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Student loans (unless hardship).

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A judgment for personal injury or death caused by driving while intoxicated.

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Taxes you withheld from your employees.

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Sales taxes you collected in your business.

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Income taxes if any of the following are true:
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You filed the return during the 2 years before you filed bankruptcy.

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Your return was due during the 3 years before you filed bankruptcy.

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Your tax liability was assessed during the 240 (about 8 months) before you filed bankruptcy.

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You never filed a return.

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You filed a late return during the 2 years before you filed bankruptcy.

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You filed a fraudulent return.

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Property taxes required to be paid during the year before filing bankruptcy.

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Restitution or fines required by a criminal sentence.

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Fiduciary fraud.

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Embezzlement and larceny.

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Willful and malicious injury to persons or property.

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Income tax interest and penalties which became due after you filed bankruptcy.

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Divorce property settlements or decrees.

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Those debts that were or could have been listed in a prior case in which were denied or waived a discharge.

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A loan used to pay a tax that you could not discharge.

§523(a)

Chapter 7 Bankruptcy Procedure

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Complete credit counseling within 180 days before filing Chapter 7 bankruptcy.  §109(h)

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Meet with bankruptcy attorney, review disclosures.

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Meet with  bankruptcy lawyer to file petition, schedules, income statements, and other documents.

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Attend meeting of creditors with bankruptcy attorney.  §341

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Keep the secured collateral (house, car) you want by  reaffirming or redeeming it.

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 Complete a Personal Financial Management Instructional Course.

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Receive your Chapter 7 bankruptcy discharge.

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Relax.

When You Need a Connecticut Bankruptcy Lawyer,

Rely on Us for Skill, Determination and Experience.

Connecticut Debt Relief By Filing Bankruptcy

Congress has designated the Serrano Law Firm a debt relief agency.

We help people file for debt relief under the Bankruptcy Code.

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Attorney John Serrano - Personal Injury, Social Security Disability, Divorce, Bankruptcy, Immigration, Workers Compensation.  Hartford, Waterbury

Please note that our law firm's website is designed to provide only general legal information.

This information is not intended to be legal advice for your individual situation.

Call us for personal injury, Social Security, divorce, bankruptcy, immigration, workers compensation and criminal cases.

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