Written by Attorney Tina Tran.
Updated July 27, 2020
For those who have been a victim of predatory lending, or suffered through an unexpected job loss, like the 1,100 Lexington employees of Blackjewel Mining, living in Lexington, the heart of the Bluegrass State, the grass can sometimes indeed seem greener on the other side. If you are dealing with an unexpected financial crisis through no fault of your own, Upsolve wants you to know “there is a lifeline.” That lifeline is Chapter 7 bankruptcy. Bankruptcy is no longer a powerful financial tool reserved solely for businesses and corporations. Regular people also have the right to rescue themselves from financial collapse by filing Chapter 7 or Chapter 13 bankruptcy. In fact, the moment you file your Chapter 7 bankruptcy in Lexington, and are assigned a case number, you fall under the protection of something known as an “automatic stay.” This stay is a legal freeze or prohibition against any of your creditors initiating or continuing lawsuits against you, garnishing your wages, or calling you to demand payment. The stay is automatic the moment your Chapter 7 petition is filed, meaning you do not have to request it. Once your case is filed and the stay is in place, you can use the breathing space it provides to complete your Lexington bankruptcy case, discharge your debts and start over. If you are eligible to partner with Upsolve, you can do it all on your own, without incurring the cost of hiring an attorney. According to Upsolve CEO and co-founder, Rohan Pavuluri, “Our mission is not just to get people back on their feet. It’s to make sure they stay there.” To find out how Chapter 7 bankruptcy in Lexington works, and the steps you can take, to not only file bankruptcy without an attorney, but see it through to completion, we invite you to read the rest of this guide.
Lexington Bankruptcy Lawyers – Estimated Cost
One of the main reasons that led Upsolve’ CEO and co-founder, Rohan Pavuluri, to start Upsolve was the realization that too many Americans in need were being “priced out of our Court system,” by the high cost of a bankruptcy lawyer. Bankruptcy attorneys charge an average of $1,100 to $1,200 for a typical Chapter 7 bankruptcy in Lexington. Upsolve knows that if the average person who needed bankruptcy relief could afford that, they would not think they are bankrupt! Of course, there are situations where the advice and assistance of a bankruptcy attorney is needed and can help save you money in the long run. For instance, if you own your home, are awaiting a personal injury settlement, or have filed bankruptcy in the past 8 years, then hiring an attorney to assist you can be an excellent investment. But you don’t have to let your financial situation get worse just because you cannot afford to hire a bankruptcy attorney in Lexington. You can file your own Lexington bankruptcy today. Upsolve can show you how!
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How to File Bankruptcy in Lexington, Kentucky for Free
Filing bankruptcy in Lexington for free begins with eight simple steps. Once you have completed these steps, all you have to do is wait for the Bankruptcy Court to send you your Chapter 7 “discharge.” The discharge is an official order from the Court that legally eliminates your debts and forbids your creditors from trying to collect money from you. The discharge also allows you to begin rebuilding your credit by granting you a fresh start. The eights steps you will need to complete are:
Collect Your Lexington Bankruptcy Documents
Former University of Kentucky Men’s Basketball coach Rick Pitino once said “Tackle the difficult things first in the morning…” When it comes to filing bankruptcy in Lexington, the thing you need to tackle first is collecting your Lexington bankruptcy documents. In your Chapter 7 bankruptcy forms you tell the Court about yourself and about your current financial situation. To do this, you will need financial documents such as pay stubs, bank statements, a W-2 forms, tax returns, credit card statements, medical bills, utility bills, cable and cell phone bills, life insurance policies, and 401k statements. You will also need a certificate of title for any car you own and the deed to your home. Later on, you will also need your driver’s license, state identification card or passport and your social security card. If you have trouble locating any of your Lexington bankruptcy documents, don’t hesitate to ask the originator of that document (like your payroll department if you are looking for a copy of your paycheck stubs) for a replacement.
Take Credit Counseling
Since 2005, every individual who files a Chapter 7 bankruptcy must file a certificate of completion from an approved credit counseling provider with their petition. This credit counseling course must be taken in the six months before filing bankruptcy in Lexington. The course typically takes thirty minutes to an hour to complete and costs between $15 and $35. You will need information from you Lexington bankruptcy documents to complete the course, such as your monthly income and a list of your monthly expenses. Most credit counseling agencies offer the course on the Internet, over the telephone or in-person. The credit counseling agency you use to complete the course must be approved by the Office of the United States Trustee to offer the credit counseling course for Kentucky bankruptcy cases. In the Lexington area, Apprisen.com is one of the approved providers for this pre-bankruptcy credit counseling course. Apprisen is rated A+ by the Better Business Bureau, is a member of the National Foundation for Credit Counseling and is an accredited non-profit by the Council on Accreditation. There is a local Apprisen office located on 2265 Harrodsburg Road in Lexington, which is only a seven minute drive down Harrodsburg Road from Rupp Arena.
Complete the Bankruptcy Forms
Once you have decided to give yourself and your family a second chance by filing bankruptcy in Lexington, the biggest task you will have to complete is filling out all of the bankruptcy forms. The fact that there are a lot of forms is undeniable, as is the fact that to complete the forms you will have to provide a lot of information to the Court. But the good news is Upsolve will be with you every step of the way either by helping you with this step directly, assuming you qualify, or by providing you with resources explaining the forms. Here at Upsolve, we suggest you view the questions on your bankruptcy forms as asking you to tell the Court who you are and what your current financial situation is, rather than looking at it as if you are being “grilled” on every little detail of your life. You will tell the Court about your creditors, or the people you owe money to, including how much you owe them. After you have given the Court some information on your creditors, you will tell the Court about your income and the stuff you own. You will also be asked about your monthly expenses like food, clothing, rent, utilities, taxes and car costs. One of the last, and unfortunately longest, forms is the Statement of Financial Affairs which asks you for information about your financial situation. This form will ask things like “Are you currently being sued?” “Does anyone owe you any money?” Or “Do you own a business?” The most important rule when completing your bankruptcy forms is to answer all of the questions, answer them completely, and answer them truthfully because in the end, you’re the one signing everything submitted to the Court for your Chapter 7 bankruptcy in Lexington.
Get Your Filing Fee
Another advantage of filing your own Chapter 7 bankruptcy in Lexington is that you can use the money you saved by not hiring an attorney to pay the $338 filing fee needed when filing for Chapter 7 relief. If you are unable to pay the entire filing fee at one time, you can request to pay the fee in installments. You must submit your request with your other Chapter 7 bankruptcy forms. If approved, you can divide the filing fee in up to four payments. However, the entire fee must be paid no later than 120 days after you file your petition and usually the Court will set a due date for each payment. Another alternative for individuals unable to pay the fee is to request a fee waiver. Fee waivers are granted to individuals and couples who earn less than 150% of the poverty level and can’t pay the fee in installments even after filing bankruptcy in Lexington. If you request a fee waiver, it must be submitted with your Chapter 7 bankruptcy petition when your case is first filed. Whichever option works best for you, the important thing is not to be embarrassed or ashamed to ask for an accommodation for paying the fee. Paying the fee in installments is very common and such requests are routinely granted by the Court. And almost all of Upsolve’ clients who request a fee waiver have their request granted!
Print Your Bankruptcy Forms
Before you can file your Lexington bankruptcy, you will need to print your bankruptcy forms. You will need to print one original set (the one you will be signing) to submit to the Court and one copy for your own records. The typical Chapter 7 bankruptcy petition packet contains between 60 to 100 pages and all the pages should be printed one side per page. If you do not have a printer at home, the Lexington Public Library only charges $0.15 per page to print documents for you. You can even upload your documents from home before leaving using their SmartAlec printing service, and then pick them up when you arrive at the library. If you prefer to print your documents in person, you can combine a trip to the library to print your documents with a chance to see the library’s famous ceiling clock and Foucault pendulum. The Central Library is located on 140 E. Main St. in downtown Lexington. It is open from 9:00 a.m. to 9:00 p.m. Monday through Thursday, 9:00 a.m. to 6:00 p.m. Friday, 9:00 a.m. to 5:00 p.m. Saturday and Sunday from 1:00 p.m. to 5:00 p.m.
Go to Court to File Your Forms
The United States Bankruptcy Court for the Eastern District of Kentucky is located in the Community Trust Building, 100 East Vine Street, Suite 200, Lexington, KY 40507 directly across the street from the Lexington Public Library. After completing your Lexington bankruptcy forms, you must submit the signed original to the Court. The public counter of the Court is open from 9:00 a.m. to 3:00 p.m., Monday through Friday. You should bring your signed, original Chapter 7 bankruptcy petition, schedules, and statements along with your filing fee or your request to pay the fee in installments or have it waived. You should also bring photo identification to get into the courthouse and keep in mind that cell phones and electronic devices are not allowed in the building. If you bring your copy of the forms to the Court, you can ask the clerk to put a stamp with all the important details of your case, such as when it was filed, and the number assigned to your Kentucky bankruptcy case.
Mail Documents to Your Trustee
When you file your Lexington bankruptcy petition, in addition to the case number that will be assigned to your case, you will also be assigned a Trustee. A Trustee is an individual appointed by the Court to administer your bankruptcy, and if necessary, sell any non-exempt property you have and distribute the proceeds to your creditors. Most Chapter 7 cases however are “no asset” cases. A “no asset” case means there are no non-exempt assets to be sold and no money is sent to creditors. The Trustee is responsible for determining if your bankruptcy is a “no asset” case. In order to do that, they review all the bankruptcy forms and certain supporting documents, such as your tax returns. You are required to send your most recent tax return, and any other documents your Trustee may request from you, so that they receive them at least seven days before your scheduled creditors’ meeting. You will be provided with your case number, the date, place and time of your creditors’ meeting, and the name and contact information for your Trustee on the same form, which will look like this blank sample. If you are not given the form when you file your Chapter 7 bankruptcy in Lexington, and do not receive it in the mail, call the Bankruptcy Court. If you have any questions about what documents you are required to mail to your Trustee, it’s best to call your Trustee directly.
Take Bankruptcy Course 2
Before you will be granted a discharge in your Lexington bankruptcy you must complete a second credit counseling course. This course must be completed no later than 60 days after the date of your creditors’ meeting. If you fail to take and finish the course by that time, your bankruptcy can be closed before your discharge is entered. If this happens, you will be required to file a request to reopen your case, and pay the filing fee a second time, all so you can submit your certificate of completion and obtain your discharge. You can take the course through the same provider that gave you the first course, as long as they are approved to offer the second course for Kentucky bankruptcy cases. However, the second course usually takes two to three hours to complete and may cost as much as $50. Regardless of how inconvenient this may be, you should not let completing the course stand between you and your discharge, which is the main goal of your Chapter 7 bankruptcy in Lexington, after all.
Attend Your 341 Meeting
Between 21 and 40 days after you file your Lexington bankruptcy case, you will meet with your court-appointed Trustee. This meeting is known as a 341 meeting of creditors or sometimes simply called a creditors’ meeting. The purpose of the meeting is for the Trustee to ask you questions about your bankruptcy petition, and to provide you with information about the consequences of filing a bankruptcy, your ability to choose a different type of bankruptcy case, such as a Chapter 13, the effect of receiving a discharge and, sometimes even the consequences of reaffirming a debt. To make sure you understand all of this, the Trustee will ask if you have read and understand the Bankruptcy Information Sheet. Your creditors have a right to attend this meeting and ask you questions as well, although most never do. Your meeting with the Trustee will typically last ten minutes or less, however you may be there longer waiting for them to conclude other meetings scheduled on the same day. In Lexington, Chapter 7 creditors’ meetings are held at the Office of the U.S. Trustee, at 100 East Vine Street, Room 529, Lexington, KY 40507. The office is located in the same building as the U.S. Bankruptcy Court. You must bring photo identification such as a driver’s license, state identification card or passport to the meeting, along with your social security card.
Dealing with Your Car
You may be concerned about what is going to happen with your car, if you file a Chapter 7 bankruptcy in Lexington. What happens to your car after filing bankruptcy depends on your unique circumstances. For example, if you lease your car, then you can simply keep paying on your lease and keep everything the same. On the other hand, if you own your car or are making payments on it, then you must choose between three options available to you in your Kentucky bankruptcy case. These three options are 1) reaffirming the loan and keeping the car; 2) redeeming the car and discharging the loan, or 3) surrendering the car and discharging the loan. Reaffirming the loan on your car requires you to enter into something known as a “reaffirmation agreement.” A reaffirmation agreement is an agreement between you and your lender that obligates you to continue making payments on your car, in exchange for the lender agreeing not to take the car back. You are not required to reaffirm your car loan. You can also choose to “redeem” the car by paying the lender the entire market value of the car. The market value is what the car is worth now, not what you still owe on it. Even if you owe a lot more on the car than it is worth, if you redeem it then the remaining balance that you owe is discharged in your Kentucky bankruptcy. The last option is simply surrendering or returning the car to the lender. The lender will pick up the car and your obligation to pay the car loan will be discharged along with your other dischargeable debts.
Kentucky Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for Lexington
Kentucky Means Test
Unless you have decided to file a Chapter 13 bankruptcy, you will need to pass the Kentucky bankruptcy Means Test before you can file a Chapter 7 bankruptcy in Lexington. Means Testing began in 2005 to prevent high income individuals from abusing the bankruptcy process to avoid paying bills they are able to pay. This is known as a presumption of abuse. The Means Test determines if your income is high enough that you should be able to pay your bills, by comparing your household size, and your income, to the median income for a household of the same size in Kentucky. For example, currently the median annual income for a four person household in Kentucky is $78,951. If you have a four person household and earn less than $78,951 then you would automatically pass the Kentucky bankruptcy Means Test, because there is no presumption of abuse in your case. If you fail the Means Test, there are some additional calculations you can complete to overcome this presumption and show the Court that you do not have the means to pay your debts. If the numbers are really close, it is usually best to seek the advice and assistance of a Lexington bankruptcy attorney to make sure you did not miss anything.
Median Income Levels for Kentucky
Kentucky Median Income Standards for Means Test for Cases Filed On or After May 1, 2022
|Household Size||Monthly Income||Annual Income|
Poverty Levels for Kentucky
Kentucky Fee Waiver Eligibility for Cases Filed On or After May 1, 2022
Eligible for fee waiver when under 150% the poverty level.
|Household Size||State Poverty Level||Fee Waiver Limit (150% PL)|
Kentucky Bankruptcy Forms
There are twenty-three different Kentucky bankruptcy forms you will need to complete for your Chapter 7 bankruptcy in Lexington. Most of these forms have more than one part. All of the standard forms you will need are available for free at the website of the United States Courts. If you file your case with Upsolve, our software includes all of these standard forms and will populate them with the information you provide. Additionally, the U.S. Bankruptcy Court for the Eastern District of Kentucky has created certain local forms you may need at some point in your Lexington bankruptcy case. While the great majority of these forms only apply to Chapter 13 bankruptcy cases, you should still familiarize yourself with what they are. For example, if you need to amend, or update, one of your bankruptcy forms after filing bankruptcy in Lexington, then you will be required to complete Local Form 1009-1(a) as a cover page for the amendment.
When you start filling out Schedule C for your Lexington bankruptcy, you will be asked to list the property you claim is protected, the law you claim it to be protected, or exempt, by, and how much of the Kentucky bankruptcy exemption you are claiming for the item. Exempt property is property of yours that is protected from being taken or sold by the bankruptcy Trustee to pay creditors. The law requested refers to the section in the Kentucky Revised Statutes or the federal Bankruptcy Code, if you have chosen to use the federal bankruptcy exemptions, that protects the specific property and the amount is the value of the property up to the available limit, if any. For example, let’s say you own a car and want to protect it with an exemption. Let’s also say the automobile is worth $2,000. To exempt it under the Kentucky bankruptcy exemptions, you write Ky. Rev. Stat. Ann § 427.010(1) under the column labelled “Specific Laws That Allow Exemption” and you put $2,000 in the column labelled “Amount of the Exemption You Claim.” Because the Kentucky bankruptcy exemption for personal automobiles goes up to $2,500, your car would be totally protected, and your Trustee would not be able to take or sell it.