Connecticut Bankruptcy Law

Most bankruptcy cases are filed in federal court and fall under the jurisdiction of federal bankruptcy law. However, state-specific legal frameworks play a significant role in shaping the outcomes of these cases. Connecticut bankruptcy law comes into play regarding certain aspects of bankruptcy, such as wage garnishments and asset seizures.

Each state maintains its own property exemptions, safeguarding filers from being left destitute during bankruptcy. These exemptions vary from state to state and determine the types and amounts of assets individuals can retain despite filing for bankruptcy. For example, Connecticut exemptions include homestead exemptions for primary residences, motor vehicles, personal property, and specific retirement accounts. These state-specific exemptions provide a crucial layer of protection, ensuring that debtors can maintain a basic standard of living and keep essential assets.

It is important for individuals navigating the bankruptcy process to be aware of both federal and state laws applicable to their particular jurisdiction. This knowledge ensures they fully understand their rights, obligations, and available exemptions. Consulting with an expert bankruptcy attorney provides valuable guidance tailored to Connecticut bankruptcy law.

Common Chapter 7 Bankruptcy Myths Debunked

All too often, those who could benefit from filing for bankruptcy hesitate to do so because of the myths they’ve heard. We aim to demystify bankruptcy. At The Law Offices of Ronald I. Chorches, we are committed to ensuring that our clients and prospective clients understand what is true about the bankruptcy process and what is not.

Myth One: You’ll Lose All of Your Assets

In a Chapter 7 bankruptcy proceeding, a trustee assesses the non-exempt assets owned by the individual filing for bankruptcy. If the non-exempt assets hold sufficient value to contribute to the repayment of the filer’s debts significantly, the trustee is authorized to proceed with their sale. Nevertheless, it is crucial to recognize that only a tiny fraction of Chapter 7 filers possess non-exempt assets. Moreover, it is rare for the assets to be valuable enough to be at risk of being sold by the trustee.

Myth Two: Bankruptcy Will Negatively Affect Your Credit Forever

Filing for bankruptcy will cause an individual’s credit score to dip temporarily. However, the fresh start that bankruptcy provides also offers many individuals the opportunity to rebuild their credit scores consistently. Moreover, our team actively helps clients with non-bankruptcy forms of debt relief and debt management, including debt consolidation. As a result, we only recommend approaches that fit our clients’ unique needs. For example, when one’s debt challenges are relatively minor, consolidating debt can help to make repayment more manageable. This action will not impact an individual’s credit score to any significant degree. 

Myth Three: Student Loans Are Dischargeable in Bankruptcy

There is a commonly believed myth that student loan debts can never be discharged in bankruptcy. For this reason, most individuals declaring bankruptcy do not initiate the next step of an adversary proceeding. They never get the chance to prove that their student loans are causing undue hardship. Only a small percentage of student loan borrowers attempt to discharge their debt. However, 4 out of 10 individuals who do take the next step end up having their student loans discharged. 

To have student loan debt discharged, you must start a second bankruptcy process known as a student loan adversary proceeding. Specifically, a student loan adversary proceeding is a lawsuit initiated by a borrower who aims to eliminate their debt due to the significant undue hardship it imposes on them. The majority of courts in the United States have adopted the Brunner test. The test is a standard that requires debtors to prove undue hardship. For example, you must show that you’ve made efforts to pay the loan but cannot maintain a minimal standard of living by doing so. Furthermore, you must show the court that your financial situation will most likely not improve promptly. 

Myth Four: Irresponsible People File for Bankruptcy

Filing for bankruptcy provides individuals with an opportunity to start fresh financially. Furthermore, it demonstrates a determination to resolve issues responsibly instead of simply running from debt. For this reason, filing for bankruptcy can be an asset to your credit history if you remain current on your debt obligations moving forward. Our firm can attest that filing for bankruptcy is often the mark of a genuinely responsible individual who has fallen on hard times. 

Law Offices of Ronald I. Chorches

Bankruptcy doesn’t have to be a complicated process. By putting consideration into each step of the process, and having a bankruptcy attorney by your side, filing for bankruptcy will go smoothly. Contact the Law Offices of Ronald I. Chorches to speak with an expert attorney who can advice you further on how to file for bankruptcy in CT.

Our service area also includes Bridgeport, Manchester, and Waterbury.