Filing for bankruptcy can be an essential lifeline for Connecticut consumers who are drowning in debt. However, deciding to file for bankruptcy is not quite as simple as filing a piece of paper and then going from there. Before any of that can take place, individuals must decide whether they will pursue Chapter 7 or Chapter 13 bankruptcy.
Americans have been working hard to pay off their credit card debt. Consumers in Connecticut and across the rest of the nation paid off a collective $40.8 billion in the first quarter of 2018 alone, but it still might not be enough to dig themselves out of debt. When working hard to pay back debt is no longer enough, Chapter 7 bankruptcy might be the smartest financial path.
The Bankruptcy Abuse Prevention and Consumer Protection Act -- BAPCPA -- of 2005 cut off a significant number of Americans from pursuing Chapter 7. However, many people in Connecticut might be surprised to learn that not only do they still qualify for Chapter 7 bankruptcy, but that they could greatly benefit from filing. According to one expert, it is a vastly underused tool for dealing with debt.
The absence of a repayment plan is one of the biggest ways in which Chapter 7 differs from Chapter 13 bankruptcy. There are many other differences as well, including an income cutoff regarding eligibility to file for Chapter 7 bankruptcy. In Connecticut, individuals who earn under a certain income threshold may qualify for Chapter 7 while still being curious about the benefits of Chapter 13. Here are a few key differences to consider.
Discharging debt through bankruptcy is extremely appealing for those who are currently unable to make ends meet. While this is possible through both Chapter 7 and Chapter 13 bankruptcies, most people find the first option more appealing as the latter first requires careful adherence to a repayment plan for a period of three to five years. However, not everyone qualifies for Chapter 7 bankruptcy.
One of the biggest questions people have about bankruptcy is how it might affect their future ability to purchase items, particularly on credit. One of the specific issues Connecticut filers may wonder about is their ability to buy a car during Chapter 7 bankruptcy. The answer to this question is not always straightforward, as there is a difference between being able to buy a car and it being a good idea.
As retailers such as Toys R Us close their doors around the United States, many people have questions about how the closing sales will function. Much of how these sales will play out in Connecticut and throughout the country is determined by bankruptcy liquidation, also known as Chapter 7 bankruptcy. This may be the fate of Toys R Us as the retailer filed for Chapter 11 bankruptcy protection in September in hopes of restructuring their operations and cutting debt.
Consumer bankruptcy filings in Connecticut continue to be vigorous despite the relative recovery in the economy. For example, personal Chapter 7 bankruptcy filings have grown among senior citizens who are 65 and older. The main reason for that increase is the high cost of medical debt, which has hit the older population particularly hard due to the prevalence of fixed or static incomes among them.
Some Connecticut readers may be familiar with the online retailer Lularoe. The company offers women's apparel and accessories, sold through local merchants running a home-based business. The company enjoyed substantial success in recent years, but it appears that some female Lularoe merchants are struggling to ply their wares.
For most Connecticut residents, filing for bankruptcy is an unfamiliar process. Faced with the need to identify, list and value all accumulated assets, many people will make a number of mistakes. In some cases, those mistakes can be misconstrued as acts of fraud. That's why it's critical to work with a qualified Chapter 7 bankruptcy attorney throughout the process.