The Process of Discharging Debt in Connecticut Bankruptcy Cases
Bankruptcy can be a challenging process, but for many individuals in Connecticut, it serves as a necessary tool for primarily eliminating overwhelming debt. Understanding the process of discharging debt in Connecticut bankruptcy cases is essential for those considering this option.
In Connecticut, the two most common types of personal bankruptcy are Chapter 7 and Chapter 13. Each has its own set of rules and debt discharge processes.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, frequently referred to as "liquidation bankruptcy," allows individuals to discharge most unsecured debts without the need to repay them. This includes debts such as credit card balances, medical bills, and personal loans. Here’s how the process works:
1. Means Test: Before filing, individuals must pass a means test, which assesses if their income is low enough to qualify for Chapter 7.
2. Filing the Petition: Once eligibility is confirmed, a bankruptcy petition must be filed with the Connecticut bankruptcy court. This includes several forms detailing assets, liabilities, income, and expenses.
3. Automatic Stay: Upon filing, an automatic stay is put into effect, halting most collection activities, including wage garnishments and lawsuits.
4. 341 Meeting: Approximately 30 days after filing, individuals must attend a "341 meeting" of creditors, where the bankruptcy trustee will verify information provided in the petition.
5. Discharge Order: If all requirements are met and minor exceptions are addressed, the court will issue a discharge order, typically within four to six months. This order releases individuals from personal liability for most debts.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, or "reorganization bankruptcy," is an option for those who have a regular income and prefer to keep their property while repaying debts over a 3-5 year period. The process includes:
1. Plan Development: Individuals must create a repayment plan detailing how they will pay back creditors. This plan must be submitted to the court for approval.
2. Confirmation Hearing: Once the plan is submitted, a confirmation hearing will be scheduled. If the court approves the plan, individuals can begin making regular payments to the bankruptcy trustee.
3. Payment Period: During the 3-5 year repayment period, debts included in the plan are managed, and creditors must adhere to the terms set forth in the confirmed plan.
4. Completion and Discharge: Upon successful completion of the repayment plan, the court grants a discharge of remaining eligible debts. This typically occurs after all payments are made as per the court-approved plan.
Types of Debts That Can Be Discharged
In general, Chapter 7 and Chapter 13 bankruptcy can discharge various unsecured debts. However, certain debts are typically non-dischargeable, including:
- Child support and alimony
- Student loans (in most cases)
- Certain taxes
- Debts from personal injury caused by intoxicated driving
Conclusion
Discharging debt through bankruptcy in Connecticut is a structured process that can provide relief for those struggling with financial burdens. Whether opting for Chapter 7 or Chapter 13, it's vital to adhere to legal requirements and timelines. Seeking guidance from a qualified bankruptcy attorney can ensure that individuals navigate the complexities of the process effectively and make informed decisions about their financial future.