Chapter 7 Bankruptcy Connecticut: 3 Things You Need to Know

1. First, you need to figure out if you qualify for Chapter 7 bankruptcy and how much it will cost you.
2. Explore alternatives to make sure you are making the most informed decision.
3. Lastly, find out if there is anything at risk such as a home or vehicles.

1) How Chapter 7 Bankruptcy Works in Connecticut

When chatting with folks about their debt freedom journey, it seems like they all have two main top of mind questions;

1. How quickly can I get my debt taken care of?
2. How much will it cost me?

My Income Exceeded The Chapter 7 Means Test Allowable in Connecticut

If your income is higher than the average income in your state, you might need to take a look at part 2 of the means test or explore other options. The means test is not a simple pass-or-fail exam, it's a two-part test. Even if you don't meet the requirements in the first part, you still have a chance to qualify for Chapter 7 bankruptcy by meeting the criteria in the second part.

Chapter 7 Bankruptcy Connecticut Income Limits

The median income limit figures in Connecticut are adjusted around every 6 months, using data from the IRS and Census Bureau. It's a way to keep things up-to-date. If you're filing for bankruptcy on or after November 1, 2024, here's what you need to know about the Connecticut median income limit:

For each additional member of your household, you can add on an extra $9,900. It's important to note that these figures can change, so it's always a good idea to double-check the US Trustees website for the most current information when you're doing your calculations.

Will I lose my belongings if I file Chapter 7 bankruptcy? Understand Connecticut bankruptcy exemptions

Bankruptcy exemptions may be able to protect your property during a bankruptcy case. They may protect certain properties from being sold off during a Chapter 7 liquidation case.

For the homestead exemption in Connecticut,

• If you're single under/over the age of 65, the homestead is expected to be $75,000.
• If you're married under/over the age of 65, the homestead is expected to be $150,000.

(Source: Connecticut Bankruptcy Law)

Keep in mind that there are more bankruptcy exemptions in Connecticut. So, it's essential to review them carefully and choose the ones that provide the best protection for your assets. Connecticut allows you to use these federal exemptions too!

Chapter 7 Bankruptcy Connecticut Pros and Cons

Let's break down the pros and cons of Chapter 7 bankruptcy in Connecticut.

Pros

1. One of the least expensive and quickest debt relief options.
2. You may be able to protect your home, vehicle(s), and other high valued assets depending on their value.
3. Debt collection lawsuits can be taken care of.
4. Potentially no deficiency.
5. You could have all unsecured debt discharged.

Cons

1. There are income requirements for qualification.
2. You could potentially lose your home and other belongings when above the exemption.
3. Negative credit report impact for 10 years.
4. Negative credit score impact (in some situations).
5. There may be debt that is not able to be discharged.
6. Difficult to prevent foreclosure.

2) Alternatives to Chapter 7 Bankruptcy in Connecticut

Let's dive into some of these alternatives and see if they might be a better fit for you.

a) Chapter 13 Bankruptcy in Connecticut

What are some alternatives to Chapter 7 bankruptcy? Well, there are a couple worth considering. One option is to consider Chapter 13 bankruptcy over Chapter 7 Bankruptcy. With a Chapter 13 case, you can restructure your debts into a manageable monthly plan. Chapter 13 can put the brakes on foreclosures, repossessions, and even wage garnishments in Connecticut. You can also catch up on missed mortgage and car payments over three or five years through a bankruptcy plan. Sometimes tax debt, child support, and alimony can be included in the plan as well.

To stay in Chapter 13, you may need to get back on track with your regular domestic support payments. Some debtors can even lower their car loan payments and wipe out second mortgages, as long as they meet certain requirements.

Can you afford Chapter 13 bankruptcy?

If you don't qualify for a Connecticut Chapter 7 bankruptcy, it could be helpful to look at a Chapter 13. You might be wondering if pursuing one is the right move for you. It may sound strange to ask if you can afford bankruptcy, but, it's an important question to consider. You can consult with a local bankruptcy attorney to see how much your Chapter 13 plan could cost.

b) Debt Relief

A debt settlement program, also known as debt relief, is for renegotiating your debt amount down to a goal of half of what you owe. Adding on fees of the settlement company once a settlement has been made, you may be paying closer to 65-75% of the unsecured debt back.

If you're thinking about going down the debt settlement route, there are a few things you should keep in mind. You'll want to consider the impact it can have on your credit score. There is also the risk of being sued by creditors. Be sure to steer clear of any debt settlement companies that raise red flags such as pushy tactics and abnormally high fees attached.

c) Connecticut Debt Management

Debt settlement companies negotiate lower amounts. On the other hand, debt management companies  focus on getting you lower interest rates. These programs usually last for about 3 to 5 years. Debt management can be a bit pricier compared to debt settlement. Debt management generally assists with credit cards and sometimes few personal loan types.

This plan may still take a low to medium impact on your score depending on where you are at right now. It is more of a proactive option though that does not include having to go behind on the accounts.

d) Connecticut Debt Payoff Planning

A debt payoff plan is when you cut down on expenses and throwing some additional funds towards your payments. This helps with avoiding paying more interest than you need to.

The Savvy debt payoff planner is a plan that considers both the avalanche and snowball method when paying back your debt. This is to help pay the debt back quicker while also dodging interest payments. It is also free and doesn't hurt to try!

3) Specific Connecticut Chapter 7 Bankruptcy Information:

Connecticut Chapter 7 Bankruptcy Credit Counseling and Debtor Education Courses

If you decide to file for bankruptcy under Chapter 7, there are a couple of courses you need to complete in order to get a bankruptcy discharge. First, you have to take a credit counseling course before you file your bankruptcy case.

After you've filed, you'll need to take a debtor education course. They're designed to help you understand your financial situation and make financially informative choices from here. You can find a list of these approved companies on the UST website.

No need to worry about finding a physical location or attending in-person classes. Since Covid, there's opportunity to complete the full process virtually. We have also found these courses to be affordable as well.

Connecticut Chapter 7 bankruptcy Court Locations341 meetings of creditors.

District of Connecticut

1. Richard C. Lee U.S. Courthouse: - Address: 141 Church Street, New Haven, CT 06510

2. Suite A012, 450 Main Street, Hartford, CT 06103

3. Brien McMahon Federal Building: - Address: 915 Lafayette Boulevard, Bridgeport, CT 06604

Chapter 7 Bankruptcy Trustees Connecticut

Now, If you're in Connecticut and considering filing for Chapter 7 bankruptcy, I've got some handy information for you. Below, you'll find a list of Chapter 7 bankruptcy trustees in Connecticut, broken down by bankruptcy district.

Richard M. Coan: (203) 624-4756

Bonnie C. Mangan: (860) 644-4204

Anthony S. Novak: (860) 432-7710

Andrea M. O'Connor: (413) 734-6411

John J. O'Neil: (203) 527-3171

Kara S. Rescia: (860) 452-0052

George I. Roumeliotis: (203) 580-3355

Conclusion

If you're curious about whether you qualify and how much it may cost you, you can try out the Chapter 7 bankruptcy means test calculator below. It'll give you an estimate of your eligibility and expenses.

Most folks opt to work with a bankruptcy attorney when dealing with Chapter 7 or Chapter 13 bankruptcy. However, If you want to learn more about filing your case yourself, you can check out "Filing Bankruptcy Without an Attorney" on the U.S. Courts website.