Kentucky Bankruptcy

The legal proceeding initiated when individuals and businesses cannot repay outstanding debts and obligations is referred to as bankruptcy. This is one of the several forms of debt relief that comes with financial consequences, such as a potential loss of assets.

Operating under the Federal Bankruptcy Code, Kentucky has its exemptions that help debtors determine what property they can shield from creditors and how to organize a repayment plan. Despite this, bankruptcy filers can choose between the federal or state exemption scheme, depending on which offers better protection for their assets.

How to File Bankruptcy in Kentucky

It is important to understand the key steps involved in filing for bankruptcy in Kentucky. Before filing, you must gather documents showing your property, debts, assets, tax returns, and bank statements. You must also complete a credit counseling course with an approved agency within 180 days before filing. Because each type of bankruptcy serves a different purpose and affects your financial situation, it is important to determine the appropriate chapter to file.

Most individuals typically file Chapter 7 or Chapter 13, while businesses may file Chapter 11. Once you decide, you can select either the federal or Kentucky exemption scheme and file your petition with the appropriate federal bankruptcy district court.

The cost of filing a bankruptcy petition in Kentucky depends on the chapter selected. Filers may expect to pay about $338 for a Chapter 7 case and about $313 for a Chapter 13 case, which includes the administrative fee and trustee surcharge.

After filing, you will be scheduled to attend the 341 creditors’ meeting, where the bankruptcy trustee may review your documents and ask questions. Finally, you must complete a second course on personal financial management and follow through with any repayment plan required under your chapter.

Kentucky Bankruptcy Types: Chapter 7, Chapter 13 & Chapter 11

In Kentucky, the most common types of bankruptcy, or chapters that individuals and businesses file under are:

Chapter 7 (Liquidation)

This type of bankruptcy allows you to eliminate most unsecured debts, such as credit card balances and medical bills, when it is no longer possible to pay the debt. During the process, a trustee is appointed by the court to sell nonexempt assets to repay debtors. This procedure is usually finalized within a few months and is the most suitable for low-income earners.

Chapter 13 (Repayment Plan)

You can create a repayment plan that allows you to pay part or all of your debts between three and five years by filing Chapter 13. This is an option for individuals who have a steady income and intend to keep their property while repaying the debts. To be successful, the repayment plan must be court-approved and followed in order for you to receive a discharge of the remaining eligible debts.

Chapter 11 (Reorganization)

Chapter 11 is often filed by businesses or individuals with heavy debts who need to reorganize their finances instead of selling off their assets. If you file this type, you can continue to operate your business while developing a repayment plan approved by the court.

Step-by-Step Checklist for Kentucky Filers

While filing for bankruptcy in Kentucky, you may use this checklist as a quick reference:

• Complete credit counseling
• Gather income, asset, and debt records
• Choose the right bankruptcy chapter for your case
• Apply either the federal or Kentucky exemption rules
• File petition and schedules
• Pay filing fee
• Attend the 341 meeting of creditors
• Complete debtor-education course
• Follow through with the repayment plan

Kentucky Bankruptcy Courts & Record Access

Kentucky has two federal bankruptcy districts, and you must file in the district that covers your county of residence.

Court Locations

• The Eastern District of Kentucky: The court district is headquartered in Lexington, with divisional offices in Ashland, Covington, London, Frankfort, and Pikeville. The main courthouse of the United States Bankruptcy Court for the Eastern District of Kentucky is:

• The Western District of Kentucky: This district covers cities like Louisville, Bowling Green, Owensboro, and Paducah. The full address of the main courthouse and office is:

Record Access

In Kentucky, bankruptcy records are maintained by the Bankruptcy Courts for Eastern and Western Districts. Since these cases are federal matters, record seekers may find their records through the Public Access to Court Electronic Records (PACER) system. Users are required to pay $0.10 to search and view case documents such as petitions and court orders.

At no cost, individuals can use the Multi Court Voice Case Information System (McVCIS) to access basic case information from any touch-tone telephone by calling (866) 222-8029. The system provides details such as the case type, debtor name, filing date, case number, debtor attorney, attorney phone number, closing date, trustee, and discharge date.

Moreover, public terminals are available to the public in the federal courthouses in each division. Anyone can visit the courthouse in person during regular office hours on weekdays to view case documents.