Article prepared by:

Law Offices of Henry J. Kroeger III

Bankruptcy Information in Plain Language

Offices located at:

531 Main Street
East Hartford, Connecticut 06108
(860) 282-0216, fax (860) 282-0261, E-mail: HJK@HJKroeger.com

Attorney Henry J. Kroeger III offers the following, easy to understand, information on the U.S. Bankruptcy process and your rights


We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. Descriptions of Chapter 7 and Chapter 13 Bankruptcy plans available below.


Please access any of the following sections below:

Introduction to Connecticut Bankruptcy:

The United States Bankruptcy Laws as applied to a Connecticut Bankruptcy are designed to provide a wide variety of financial relief for all honest individuals and businesses who find themselves in financial difficulties. The primary purpose in filing a Connecticut Bankruptcy through the U.S. Bankruptcy Code is to provide an honest debtor with a "fresh start." All individuals and businesses who are willing to honestly disclose all income, expenses, assets, liabilities, and financial affairs may take advantage of the relief gained by filing a Connecticut Bankruptcy as provided through the U. S. Bankruptcy Code. Connecticut Bankruptcy relief is designed, in most circumstances, to eliminate, reduce or reorganize debt and allow the debtor to keep enough assets to gain the "fresh start" needed for their respective personal and/or corporate financial lives. A Connecticut Bankruptcy is designed on an individual basis to deal with your creditors while protecting your assets.

A Connecticut Bankruptcy filed through the U.S. Bankruptcy Code provides relief in a very wide variety of circumstances. The Bankruptcy Law or Code is a federal law divided into various types of relief as administered and filed in the various fifty United States and thus available for a Connecticut Bankruptcy. The various types of relief available are called Bankruptcy Chapters. The exact type of relief or Chapter available to you in a Connecticut Bankruptcy is determined by your individual situation.

Bankruptcy Report Act of 2005

The Bankruptcy Law (and thus a Connecticut Bankruptcy) was significantly changed in October 2005 by Congress when it enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005; effective October 17, 2005. The changes contained within this 2005 law dramatically alter a Connecticut Bankruptcy as follows: the choices available in a Connecticut Bankruptcy, the manner in which a Connecticut Bankruptcy is structured, the methods used in calculating income and expenses in a Connecticut Bankruptcy and the protection of assets in a Connecticut Bankruptcy.

The major reforms as applied to all consumer bankruptcies, including a Connecticut Bankruptcy, are intended to force some higher income debtors into paying back some or all of their consumer debts though a Chapter 13 Connecticut Bankruptcy rather than simply eliminating the consumer debts through a Chapter 7 Connecticut Bankruptcy (see below, explaining the difference between Chapter 7 and Chapter 13 as applied to a Connecticut Bankruptcy). The device used for the forced placement of some higher income debtors into a Chapter 13 Connecticut Bankruptcy is called the "means test" and it measures your household income as against your daily living expenses to arrive at a presumptive determination pushing you towards a Chapter 7 or Chapter 13 Connecticut Bankruptcy. The majority of people who file a Connecticut Bankruptcy are still able to file a Chapter 7 Connecticut Bankruptcy however, even those individuals who now are forced to file a Chapter 13 Connecticut Bankruptcy still obtain significant financial advantages and significant protection of assets.

All debtors, including any Connecticut Bankruptcy debtor, must now undergo a credit counseling program or session prior to filing a Connecticut Bankruptcy; this can be completed in person, by phone or on line and must done be through one of the Connecticut Bankruptcy Courts' "approved agencies". The credit counseling agency will issue a certificate of completion which is good for 180 days and must be filed with your Connecticut Bankruptcy petition; the "certificate is required to file for Connecticut Bankruptcy protection.

All debtors, including any Connecticut Bankruptcy debtor, must now also undergo a "financial management course" (also called a debtor education course); this can be completed in person, by phone or on line. The agency will issue a certificate of completion which must be presented to the court in order to obtain your Connecticut Bankruptcy discharge.

Lastly, all debtors, including any Connecticut Bankruptcy debtor, must now produce a substantial amount of financial documentation to verify and support the information contained within the Connecticut Bankruptcy petition filed with the Connecticut Bankruptcy Court; examples include bank account statements, income earning statements, property valuations and tax returns.

A Chapter 7 Connecticut Bankruptcy

Chapter 7 Connecticut Bankruptcy is designed for individuals and results in a discharge (or forgiveness) for most debts. A discharge is the final court order eliminating those debts and it operates as a shield which prohibits the creditors from taking any steps to collect those debts listed on a Chapter 7 Connecticut Bankruptcy. There are some debts which cannot be discharged in a Connecticut Bankruptcy, for example: taxes(some exceptions exist), loans to pay taxes, child support, alimony, divorce property settlement debts, student loans and government or court ordered fines. In addition, debts incurred as a result of injuries you may have inflicted upon someone else while intoxicated or intentional acts which have inflicted injuries upon anyone cannot be discharged in a Connecticut Bankruptcy. Any debts you incurred through fraud or deception cannot be discharged in a Connecticut Bankruptcy. Also, recent cash advances and purchases of luxury goods may not be discharged in a Connecticut Bankruptcy.

The filing of the bankruptcy acts as an immediate prohibition against all creditors from taking any further acts whatsoever to collect their debts (called an automatic stay in a Connecticut Bankruptcy). Any creditor who wishes to proceed against you must obtain the permission of the bankruptcy court by filing a motion in the Connecticut Bankruptcy Court; after which a hearing is held if requested.

All Bankruptcies, including a Connecticut Bankruptcy, are designed and intended to treat all creditors fairly and equally, this can only be accomplished with full disclosure of all financial information; your discharge may be denied if you conceal or destroy property, conceal, destroy or falsify records, or make false oaths concerning your financial condition. You must and should include all debts on your Connecticut Bankruptcy Petition. This insures that all creditors are treated equally and also insures that your discharge applies to all debts which are in fact dischargeable. In the event a creditor is not listed, the discharge issued in a Connecticut Bankruptcy may not apply and you may be responsible for the repayment of that debt.

Not everyone is eligible for a Chapter 7 Connecticut Bankruptcy. For instance, you cannot file a Connecticut Bankruptcy Chapter 7 case : 1) if you had a prior bankruptcy case dismissed in the last 180 days for wilful failure to obey a court order, 2) if you requested your case be dismissed in last 180 days and a creditor had filed a Motion For Relief From Stay, 3) if you received a discharge in a prior Chapter 7 case in last 8 years or received a Chapter 13 discharge in last 6 years( unless you paid your unsecured creditors at least 70% through the best efforts of your Chapter 13 plan) or 4) if your income is too high with respect to the means test as mentioned above. The above items are not exhaustive of the eligibility requirements for a Chapter 7 Bankruptcy therefore you should consult a Connecticut Bankruptcy lawyer, like Attorney Kroeger for additional information.

Retention of assets in a Chapter 7 Connecticut Bankruptcy:

In accordance with the principle of a "fresh start", a Connecticut Bankruptcy through the U.S. Bankruptcy Code allows you to retain a certain amount of assets while discharging your debts. The real and personal property you are allowed to retain and protect in bankruptcy is referred to as "exemptions" and, as such, is listed or claimed on your Connecticut Bankruptcy Petition. These exemptions are quite generous and include various dollar amounts for household furnishings, automobiles, clothing, saving accounts, home equity, pensions and other assets. It is noted here that most pension plans are fully exempt to the extent, regardless of dollar value, that it is needed for the future support of the debtor; however, in general, the pension plan must be the type where you cannot withdraw the monies without penalty until retirement or termination of employment. These pension plans are usually exempt if they qualify under the I.R.S. 401a through 401 k regulations.

There are Federal Exemptions for your property contained within the U.S. Bankruptcy Code and there are also individual State Exemptions contained within individual state statutes. In a Connecticut Bankruptcy you may elect either the federal exemptions or the Connecticut Bankruptcy state exemptions; the most advantageous choice may only be determined after an analysis of each individual financial circumstance by an attorney. Exemptions must be chosen carefully as any property of the debtor which is not exempted is subject to liquidation and sale by the Trustee who will apply the proceeds to the creditors in accordance with the preferences or orders of payment as established by the Bankruptcy Code. In some circumstances of a Connecticut Bankruptcy, the liquidation of the debtors non-exempt assets is advantageous to the debtor as the remaining debts are discharged and the debtor does retain all exempt assets.

Connecticut Bankruptcy and your home:
If you own a home you can keep it by use of the Connecticut Bankruptcy exemption scheme. Your home's exemption is determined by the amount of equity in your home (equity is the difference between the value of the house less all mortgages filed against the home).You can elect to use the federal homestead exemption of $20,200. Or the Connecticut State exemption of $75,000; if a husband and wife file a joint Connecticut Bankruptcy petition and jointly own the home then the amount of those exemptions double. In order to keep your home you must be and remain current in all mortgage payments.

Connecticut Bankruptcy and your car:
If you own a car you also can keep it by use of the Connecticut Bankruptcy exemption scheme. Your car's exemption is determined by the amount of equity in your car (equity is the difference between the value of the car less all liens filed against the car).You can elect to use the federal auto exemption of $ 3,225.00 or the Connecticut State exemption of $.3,500.00

Lastly, it should be noted that upon an appropriate filing of your Connecticut Bankruptcy petition, your current income cannot be taken to satisfy any part of any discharageable debts for any reason whatsoever. Your income will still be subject to those non-dischargeable debts only after you have completed the Connecticut Bankruptcy process and received your discharge.

Secured and Unsecured Debts in a Chaper 7 Connecticut Bankruptcy:

Bankruptcy law and a Connecticut Bankruptcy treats secured and unsecured debts very differently. A secured debt is a debt which is secured by some type of collateral (property), where you have pledged in writing some property as collateral or security for a loan; examples are a home mortgage or a car loan. A Connecticut Bankruptcy Chapter 7 cannot alter/modify your secured debts nor can it save your home from foreclosure nor your auto from repossession if you fail to keep your payments current.

An unsecured debt is one in which no security or collateral is pledged for a debt; examples are most credit cards, medical bills, legal bills and other debts which are not secured debts nor defined as non dischargeable under the Bankruptcy Code. Unsecured debts are in general forgiven or discharged in a Connecticut Bankruptcy.

A Chapter 7 Connecticut Bankruptcy provides you the following choices with respect to secured debts. If you wish to keep the property (the house or car), you may do so however you must continue to make your timely payments and keep same current; your failure to make and keep payments current will likely result in the property being repossessed by the creditor. If you wish to surrender the property (the house or car) you may do so and the entire underlying debt is forgiven/discharged. Debtors in a Connecticut Bankruptcy Chapter 7 who owe more on the debt than the property is actually worth often chose to surrender the property to avoid the remaining monthly payments due on the debt.

A special note on car debt choices in a Connecticut Bankruptcy Chapter 7:

1. Surrender the car as indicated above.
2. Sign a Reaffirmation Agreement: you will continue to pay the car loan, however this obligates you to pay the entire loan balance on the debt regardless of future circumstances like loss of the car to repossession or loss of your job. This is a dangerous course to take but the 2005 Bankruptcy Law may require you to do this in a Connecticut Bankruptcy; the Connecticut Bankruptcy law is not settled as to whether or not you must sign these agreements to keep your car despite being current on your car payments.
3. Refuse to sign the Reaffirmation Agreement but continue to make and keep timely payments. However the failure to sign the Reaffirmation Agreement may allow the creditor to repossess the car despite you being current on the payments. However, again Connecticut Bankruptcy law is not settled as to whether or not a creditor can repossess your car despite being current for the sole reason of failure tpo sign the Reaffirmation Agreement.
4. Redeem the car: Redemption is a method by where you pay off the current existing car loan and retain the car. This is done by taking out a new loan to pay off the existing loan. If your car loan is more than 910 days old, you may be able to pay to the existing creditor only the present value of the car rather than the higher loan amount due.

The Connecticut Bankruptcy Chapter 7 steps:

1) Meet with Connecticut Bankruptcy Attorney
2) Complete credit counseling and acquire certificate
3) Deliver all documents requested by attorney to confirm and verify information contained in the Connecticut Bankruptcy petition
4) Review and sign the Connecticut Bankruptcy petition
5) Attend the required 341 Meeting with your attorney
6) Complete the financial management course and provide certificate to your attorney for filing with the Connecticut Bankruptcy court
7) Review any Reaffirmation Agreements and discuss the options and consequences with your attorney under the Connecticut Bankruptcy law.
8) Receive your bankruptcy discharge

Chapter 11 Connecticut Bankruptcy

Chapter 11 is the debt reorganization chapter used by most businesses but is also available for Connecticut Bankruptcy individuals, although not really suited to most individual needs. In this Chapter, the debtor proposes a plan by which to re-pay the creditors in whole or in part, retains control of the business and at the end of the plan term re-emerges as financially sound. The creditors vote on the acceptance or rejection of the Connecticut Bankruptcy plan, which also must be approved by the Court. The Court also has the power to appoint a Trustee to take possession and control of the business if appropriate. This Chapter has been successfully used by large and small corporations alike.

Chapter 12 Connecticut Bankruptcy

Chapter 12 is designed for family farmers. Family farmers propose a plan to re-pay all, or in some instances part of, their debts over a period of three to five years. The plan must be approved by the Court. Plan payments are made through the Trustee who distributes the payments to the various creditors. The Trustee does not take control of the farming operations but does monitor the farming operations through the course of the plan term. This type of Bankruptcy allows the operations to continue and as long as the plan is approved by the Court and the plan payments are made, the creditors are bound to accept the plan payments and cannot, under most circumstances, disturb the family farming operation.

Chapter 13 Connecticut Bankruptcy

This is the type of Connecticut Bankruptcy mostly familiar to the public as that utilized by people to save their homes from foreclosure; however it is also used by a Connecticut Bankruptcy debtor who has too much income under the "means test" for a Chapter 7 and who therefore must file a Chapter 13. A Chapter 13 requires the debtor to commit a portion of his/her future income to re-pay some appropriate percentage of the unsecured outstanding debt. A Connecticut Bankruptcy Chapter 13 is a type bankruptcy which allows debtors to re-pay their creditors out of future income over a 3 to 5 year period while retaining their assets. The Connecticut Bankruptcy debtor writes or proposes a plan which must be submitted to the court within fifteen days of the filing of the Connecticut Bankruptcy Petition. This type plan offers to re-pay most debts on a reduced and restructured basis while imposing reduced interest rates. The plan is examined by the Connecticut Bankruptcy Trustee and must be approved by the Connecticut Bankruptcy Court. The Connecticut Bankruptcy Trustee and the Connecticut Bankruptcy Court will examine the current income and mandatory monthly living expenses of the individuals to ensure that there exists sufficient excess monthly income (called disposable income) to actually fund the payments proposed under the plan. The Connecticut Bankruptcy Chapter 13 debtor must propose a plan which shows the "best efforts" of a debtor given his/her total financial condition. The monthly payments are paid directly to the Trustee who distributes same to the various creditors. Once the plan is approved by the Connecticut Bankruptcy Court the various creditors must accept the payment terms and can take no actions to collect on the debt. In the event that the approved plan calls for less than repayment of 100% of the debt, then upon successful conclusion of the plan, the balance of the unsecured debt is discharged. Any legal interest which was accruing on the debts ceases and any future interest paid on the debt is paid only in accordance with the terms and conditions of the plan. The approval of the plan by the Connecticut Bankruptcy Court prohibits the creditors from any attempts to collect the debts, stops all courts actions and protects the income of the debtor while the plan remains in effect.

There are numerous requirements to be eligible for a Connecticut Bankruptcy Chapter 13 filing and there are requirements which must be contained within a Connecticut Bankruptcy Chapter 13 plan; these can be discussed with Attorney Kroeger at your initial appointment in our office.

Using a Chapter 13 Connecticut Bankruptcy to save your home in foreclosure:

This type of Connecticut Bankruptcy is used by individuals who are facing, or who are in, foreclosure proceedings with respect to their homes. In addition to all of the information set forth above regarding a Connecticut Bankruptcy Chapter 13, the following information applies. The Chapter 13 plan addresses only those amounts and portions of the mortgages which are in arrears yet it also must include or address the amounts due on all of your secured and unsecured debt; your current monthly expenses are paid and maintained by you outside the bankruptcy plan. The state foreclosure court action is stopped upon the filing of the Connecticut Bankruptcy petition and once the plan for re-payment is approved, the foreclosing party(Bank) must accept the re-payment terms. The interest which was accruing on the arrears portion of the debt is replaced with the interest as proposed and approved under the plan for those payments which stand in arrears. Of course, the debtor must be able to and in fact continue the current mortgage payments as due to the creditor on a monthly basis during the term of the plan.

This type of Connecticut Bankruptcy is used by individuals who are facing, or who are in, foreclosure proceedings with respect to their homes. In addition to all of the information set forth above regarding a Connecticut Bankruptcy Chapter 13, the following information applies. The Chapter 13 plan addresses only those amounts and portions of the mortgages which are in arrears yet it also must include or address the amounts due on all of your secured and unsecured debt; your current monthly expenses are paid and maintained by you outside the bankruptcy plan. The state foreclosure court action is stopped upon the filing of the Connecticut Bankruptcy petition and once the plan for re-payment is approved, the foreclosing party(Bank) must accept the re-payment terms. The interest which was accruing on the arrears portion of the debt is replaced with the interest as proposed and approved under the plan for those payments which stand in arrears. Of course, the debtor must be able to and in fact continue the current mortgage payments as due to the creditor on a monthly basis during the term of the plan.
The Connecticut Bankruptcy Chapter 13 plan must address your unsecured debts and depending on your disposable monthly income available, you may be able to reduce the amount of unsecured debt therefore allowing you to divert more money into curing the mortgage arrearage debt. In the event that during the 3-5 year plan period your future financial circumstances do not allow you to continue with the required plan payments then your case will dismissed or converted to a Connecticut Bankruptcy Chapter 7; of course if not caught up with the mortgage arrears your home will wind up back in foreclosure.

Once the plan is accepted and is paid over the appropriate period, the debtor in most cases is given a discharge. This is a realistic and viable alternative to foreclosure in the appropriate circumstances. It is noted that Chapter 13, is only available to individuals with regular income(wage earners) whose total debts do not exceed $1,010,650.in secured debt and $336,900 in unsecured debt.

In summary, the goals of a Connecticut Bankruptcy Chapter 13 plan is to give you a 3-5 year period to catch up with all of your overdue secured debt payments (home mortgages, car notes) while paying some less than 100% to your unsecured creditors resulting in a discharge of the balance.


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