Written by Attorney Jacquelyne N. Mosley-Pastrana.
Updated August 17, 2020
If you realize your debt has piled up and you need to get your life back on track, filing for bankruptcy may be an option you want to consider. Many have filed a Connecticut bankruptcy for various reasons including divorce, medical bills, and household liabilities. For some, the departure of companies like Aetna in Hartford and General Electric in Fairfield, have taken the jobs with them. For others, debt has piled up as income taxes in Connecticut are among the 10th highest in the country. The increased cost of living has severely affected those living on a limited income as Connecticut ranks 9th in the nation for residents 65 and older looking to retire. In Connecticut, as in most states, you can file for bankruptcy after 91 days of residency. Connecticut bankruptcy filers have the option to use Federal exemption or the state’s exemptions. An exemption is property you are allowed to keep during and after bankruptcy. To use Connecticut’s exemptions, you must have lived in the state for the last two years. When you file for Connecticut bankruptcy, you have chosen to get the upper hand on your debt and look to the future. Filing a Connecticut bankruptcy is not restricted to a specific age or class. Those from rapper Curtis “50 Cent” Jackson to Former U.S. Senator Linda McMahon filed for bankruptcy in Connecticut and were able to get a fresh start to improve their lives. If they can do it, so can you.
Connecticut Median Income Levels
Connecticut Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
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Discharge in Bankruptcy for Connecticut
A bankruptcy discharge is the ultimate goal of a Chapter 7 bankruptcy. A Connecticut bankruptcy discharge is a final order issued by the Connecticut Bankruptcy Court clearing you of liability for certain debts you listed in your Connecticut bankruptcy. Only non-dischargeable debts are not wiped out. These are few and include student loans and tax debt. Shortly after the bankruptcy discharge order is issued to you, your case usually closes.
A Connecticut Chapter 7 bankruptcy typically lasts 4-6 months long. After filing for bankruptcy, you want to prepare to receive the discharge of bankruptcy. You will want to submit all the required documents. You will also need to take a post-bankruptcy debtor education course from an approved Connecticut credit counseling agency and file it with the court. In some cases, debtors were denied a discharge because they did not complete and submit proof of the second debtor education course.
It is essential to keep your discharge order safe with your other bankruptcy documents. Many have found the order useful to inform harassing creditors of the discharged debt and tell them to stop contact. Many who have received a discharge have used it to help them rebuild their credit.
Connecticut Means Test Calculator
For an assessment as to whether you qualify for Chapter 7 Connecticut bankruptcy, you can use a Connecticut Means Test Calculator. There are many online, but it is important you use one that is up to date with the correct calculations. The first step to the Chapter 7 Means Test is to determine whether your income is below Connecticut’s median income level. The Statement of Your Current Monthly Income form, calculates your income and compares it to the median income for households of your size in Connecticut. Gather all sources of income, including wages, alimony, and child support, and calculate your monthly income by adding up your income for the six months before you filed for bankruptcy. The amount is added up, then divided by six for the monthly income amount. The income levels in Connecticut are annual amounts, so the monthly number is then multiplied by 12. The court compares your annual income to other households of the same size in Connecticut. You have passed the Connecticut Means test if you fall below the income levels of households of your size in Connecticut. You can now file your Chapter 7 bankruptcy. If your income is above the median income levels, you will need to move on to complete the next part of the Means Test, the Means Test Calculation form.
The Connecticut Means Test Calculation calculates your disposable income. It adds up your monthly expenses and subtracts them from your monthly income to verify if you have money left over at the end of each month to pay down the debt you owe. You may only add up allowable living expenses. To qualify under the Means Test Calculation, you will want the calculation to display negative disposable monthly income. If you have positive disposable income, it is a “presumption of abuse” because it means that you have money left over at the end of the month to pay down your debt and should not qualify for a Chapter 7 Connecticut bankruptcy. For example, if within the last six months you received $2000 from a layoff severance from the recently closed Brookstone in Danbury, this would count as income. Then if you have positive disposable income, this is considered “abuse” because, at the time of the calculation, it appears you have money to pay down your debt.
If you have negative disposable income, Upsolve may be able to assist you in filing for Chapter 7 Connecticut bankruptcy. It offers its services at no cost as it helps low-income clients that fall below the median income level. It has resources to assist you through the Means Test calculations and your filing if you qualify.
You may be exempt from the Means Test calculation if your liabilities are not primarily consumer debt. Consumer debt is personal or household debt. For example, let’s say a few years ago, you opened a seafood restaurant. It was a hit! Camille Little was a repeat customer, and her presence brought tons of fans. In 2017, Connecticut Suns traded Little and basketball fans no longer ate at your restaurant. You took out loans to keep it afloat. In that case, your debt would primarily be business debt and not consumer debt. In such a situation, you may be exempt from the Chapter 7 Means Test. Other exemptions include debt incurred by disabled veterans while on active duty or by Reservists/National Guard while on active duty or homeland defense.
What Happens If I Fail the Means Test for Connecticut?
If the Means Test determines that you have money to pay off your debt, then you will first want to check your numbers and recalculate. It is essential that your calculations are correct. After recalculating, some filers have decided to wait to file. For example, if you received a severance, settlement, or one-time large amount of money, it may benefit you to consider recalculating in a few months when the calculation reflects your actual income.
It is also important to be forthright and disclose true income and expenses. Each bankruptcy case is assigned a trustee. The trustee will review the value of anything you own (i.e. assets) to see what you can afford to pay back to creditors. It will distribute any nonexempt assets found. A nonexempt asset is property you own in bankruptcy that is beyond the value of what you are allowed by law. Out of necessity, some in Connecticut consider filing Chapter 13 bankruptcy due to their high income or that they cannot pass the Means Test.
If you think you may fail the Connecticut Means Test, you may want to contact a Bankruptcy attorney. You may want to ask about the allowable expenses in Connecticut and whether you calculated them correctly. You may also want to discuss verifying your household size, income, deductions, and if an exemption applies to you.