Written by Attorney Eva Bacevice.
Updated August 18, 2020
There are a number of things to think about when you are considering a Kentucky bankruptcy case, but one of the most important considerations is whether a Chapter 7 case is an option for you. Based on a change to the Bankruptcy Code in 2005, there is now an initial qualification step, the Chapter 7 Means Test, that all debtors need to pass before filing. This change came about because Congress was concerned that people were abusing the bankruptcy system, by filing for Chapter 7 relief even though they had the means to pay all or some of their debts. There are two ways to pass the Chapter 7 Means Test. First, if your current monthly household income averaged over the last 6 months is lower than the median income for a household of your size in Kentucky, you immediately pass the Means Test. If that is not the case, you can still qualify by going through the full means test calculation, which will compare your monthly income with allowed monthly expenses. If at the end of the month you have little to no disposable income remaining, you pass the bankruptcy Means Test Kentucky and qualify for Chapter 7 relief.
Kentucky Median Income Levels
Kentucky Median Income Standards for Means Test for Cases Filed On or After May 1, 2021
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Discharge in Bankruptcy for Kentucky
The goal in your Kentucky bankruptcy is to get your order of discharge because this is the Bankruptcy Court’s order allowing you to walk away from your debts and prohibiting your creditors from asking you to pay them ever again. You will need to keep in mind that some non-dischargeable debts (like child support) will survive the bankruptcy, but for most people the relief of no longer having to pay their unsecured debts (like credit cards and medical bills) is significant. To receive your Kentucky bankruptcy discharge, it is important to make certain that you have properly filed all required documents, completed all mandatory steps (such as credit counseling before and after your case is filed) and attend your Meeting of Creditors with your bankruptcy Trustee. Upsolve can partner with you through this process, step by step, to make certain every box is checked. You should receive your Kentucky bankruptcy discharge and be able to move forward with your fresh start approximately 60 days after your 341 hearing.
Kentucky Means Test Calculator
If you do not immediately qualify for a Kentucky bankruptcy under Chapter 7 because your income is too high, you will need to go through the full Mean Test analysis to determine if you qualify. It is very important that you are using an up-to-date Kentucky Means Test calculator so that you have the best chance to qualify. You can easily find lots of Means Test calculators online, but it can be difficult to tell which, if any, have the most current information. You need not worry about that if you use Upsolve’s Means Test calculator as it is kept current to the day for Kentucky and all other states. The Chapter 7 Means Test is dependent on the final calculation - is there income left at the end of the month that could be paid to your creditors? You need to be certain that you are properly utilizing the most current figures for all reasonable allowed monthly expenses to ensure that the final calculation accurately reflects your situation. If you pass the bankruptcy Means Test in Kentucky and are eligible to seek relief under Chapter 7 of the Bankruptcy Code, you may be able to continue working with Upsolve, who will guide you towards your discharge every step of the way.
What Happens If I Fail The Means Test for Kentucky
If you complete the extended Chapter 7 Means Test analysis and do not qualify to file a Chapter 7, there are additional steps you can take to make certain you are fully exploring all options for your Kentucky bankruptcy. First, you can go through the Means Test again to make certain that you are including all possible expenses. It can be easy to miss something if it isn’t a regular monthly purchase. You might give charitable gifts once per year which you can average over twelve months to include. Once you are satisfied that you have fully included all expenses you should think about whether there are any big changes in your immediate future. Is your company facing possible layoffs? Is your work tied to a seasonal industry like horse racing? If so, think about when you are trying to file - if it’s right at the end of the season, your annual income based on the past 6 months is going to appear much more robust than it will in a few months. If any of these scenarios apply, it can make sense to wait and see if you qualify after the change occurs. If that is the case then Upsolve can assist you with the rest of your case with our Kentucky Bankruptcy Guide. If not, it might be time to explore whether a Chapter 13 case could grant you relief instead.