Bankruptcy in Connecticut
Author: Cole
Though the Connecticut economy has weathered the national financial crisis better than most parts of the country, residents have become increasingly worried about carrying unhealthy amounts of consumer debts in such uncertain times. In the face of ever spiraling credit card balances, too many Connecticut borrowers we have spoken with see no other option beyond bankruptcy protection. To be sure, for the most desperate debtors, Chapter 7 debt elimination may well be the best – or, indeed, the only – option available to clear their accounts and start fresh (no matter how long the process may take). Alas, legislation passed four years ago by the United States Congress dramatically altered both the protections that bankruptcy could offer ordinary individuals and their treatment should Chapter 7 bankruptcy in Connecticut even be rendered available. Much as the federal statutes were changed because of pressure from political action committees bankrolled by the credit card companies, it cannot be said that consumers had not taken advantage of past bankruptcy statutes to exploit the former system. With lenders opening accounts to seemingly every Connecticut borrower looking for an excuse to spend freely and without consequence, too many households found themselves unable to pay back foolish purchases. There’s always been a need for bankruptcy protection in America, but, alongside the new opportunities for credit, consumers – in Connecticut and across the nation – took untoward advantage of the spending freedoms and paved the way for current restrictions.
To be sure, especially for those Connecticut borrowers who’ve faced unusual torments – whether loss of employment or hospitalization or similar unforeseen tragedies – Chapter 7 bankruptcies still serve as a seawall stemming the onrushing tides of debts. Those consumers filing for bankruptcy protection this very moment may have to pay a bit more for credit counseling classes (certificate required before the Connecticut court clerk shall even process the bankruptcy petition), and, given the continually more detailed paperwork involved, experienced bankruptcy attorneys are more important than ever – with prices to match their newfound value. Furthermore, most taxes, all student loans, debts that came as a result of criminal fraud, and all familial obligations from alimony to child support shan’t be touched by any governmental protection. Chapter 7 bankruptcies in the state of Connecticut will not also touch any purchases more than five hundred dollars that had been made in the last three months before the bankruptcy petition is filed. More to the point, the Chapter 7 bankruptcy proceedings – even if the borrowers will successfully argue eligibility to the Connecticut court trustee and genuinely manage to liquidate those debts that would be considered viable under current rules – actively look to take whatever possessions from the filers are open to seizure by law.
Whenever a borrower declares bankruptcy in Connecticut, the individuals retain the option of invoking either federal or local bankruptcy exemption to protect their personal property. As yet another example of the importance of attorneys trained in bankruptcy law, and, considering the current economic problems, law firms have been switching the emphasis of their practices right and left. Every Connecticut debtor should take special care researching their lawyers’ level of experience regarding the matter. Those legal professionals well trained in their craft should be able to guide their clients through the Chapter 7 proceedings with a minimum of loss (though some damages must be assumed, regardless), and, most especially, the attorneys chosen should be more than familiar with the distinctions between the exemptions recorded under Connecticut state law as opposed to the severely more limited options granted by the federal government. These statutes are intended to help borrowers keep hold of their more prized possessions, but, since the equity of all property will be subject to a somewhat arbitrary estimation of their replacement value (as opposed to, in recent years, before the past legislation, the far more forgiving resale value), all borrowers have to consider the potential fluctuations.
Obviously, we cannot list every single Chapter 7 bankruptcy exemption that’s recorded under Connecticut law. Your authors would be remiss, once again, if we pretended to do more than offer merely an overview of the larger guidelines available within the Connecticut bankruptcy code. At the same point, however, every consumer interested in the bankruptcy debt elimination alternative should have some knowledge about the protections available. Nothing’s guaranteed, of course, as long as so much depends upon the whims of the bankruptcy trustee randomly selected by the Connecticut judicial system, but all borrowers may as well have an awareness of what may be seized. Each state, for example, maintains a so-called homestead exemption, and, in Connecticut, the borrowers are allowed seventy five thousand dollars equity of their primary residence whether that may be home, condo, trailer, or house boat. Similarly, fifteen hundred dollars of equity for an automobile or any motor vehicle shall be protected by the state of Connecticut, and, if a married couple files a petition for Chapter 7 bankruptcy jointly, the exemption’s raised to three thousand dollars (the home exemption, alas, is not doubled for spouses).
Further, Connecticut law protects household furnishings – from living room tables to couches to bedroom linens – provided there’s nothing valued above ordinary means. Funds from life insurance benefits granted the filer or filers will be secured for as much as the trustee (based upon the Internal Revenue Service guideline for Connecticut) deems necessary for support. The treatment of retirement plans in Connecticut, on the other hand, varies greatly. Pensions and any dividends from stock market investments or similar annuities could reasonably be expected to be guarded so long as the courts believe the retirement plan to be necessary income. In the same way, all tools and materials related to the trade of the consumers filing – up to a certain amount, depending upon the profession and the objects involved – should not be threatened, and, as long as taxes or familiar support are not already past due, unemployment benefits from the state of Connecticut will continue unabated through bankruptcy. Worker’s compensation and any money due the newly bankrupt resulting from injury shall continue to be paid regardless of debt presuming the attorneys do their jobs properly. Connecticut residents are virtually the only Americans to be guaranteed protection of such debts, and they need to make absolutely sure that their lawyers are certain of all local loop holes. We live in an especially forgiving state, to be sure. Connecticut, uniquely, offers a “wildcard” exemption for their residents petitioning for Chapter 7 bankruptcy protection that vouchsafes personal property of any sort up to one thousand dollars above and beyond the preceding exemptions. While this “wildcard” will still be subject to the whims of the courts, remember that all actual values (even family heirlooms) are based upon governmental oversight. Connecticut debtors truly in need of debt liquidation are certainly better off than their fellow citizens residing in less enlightened states, but the potential disadvantages of bankruptcy must still be kept in mind.
Chapter 7 bankruptcies truly are a last ditch measure for only the most desperate of borrowers. Despite the Connecticut exemptions, potential seizure of assets by the courts to auction with proceeds remunerating lenders remains a constant risk. Much as your authors recognize the current economic difficulties affecting Connecticut and the nation at large, bankruptcy protection’s no longer a catch all for all problems that may affect consumers who’ve spent unwisely or fallen upon hard times. Especially considering the other debt relief options now available to Connecticut borrowers (and the expenses of even an initial consultation with bankruptcy lawyers), only those consumers truly without another alternative should even think about braving the rigors of Chapter 7 debt elimination, but, at the same point, consumers should examine all of the debt management strategies just as thoroughly as they would Connecticut bankruptcy protection. Consumer Credit Counseling, for example, has been largely debunked in the past few years after media watchdogs and governmental investigators discovered that CCC firms – even the ones announcing themselves as non profit – actually take more money from the credit card companies they’re supposedly fighting against than their genuine consumer clients. Similarly, after the implosion of the mortgage loan industry and the falling real estate values throughout Connecticut and all of New England, debt consolidation based upon equity loans should be avoided no matter how supposedly low the interest rates offered or smooth the loan officer’s sales pitch.
The debt settlement strategy, though it may seem faintly miraculous to Connecticut borrowers unfamiliar with the program, isn’t actually that far different from Consumer Credit Counseling or other debt consolidation approaches rather more publicized within the greater Connecticut area. Well trained debt settlement negotiators, generally (since this is a relatively new field) trailing experience in the financial planning or credit counseling economic sectors, who often work in tandem with attorney or economic advisors, argue for surprisingly substantial reductions to their clients unsecured debt accounts and our Connecticut respondents have regularly reported immediate credit card balance cuts of more than fifty percent. To successfully argue their point, the debt settlement firm effectively takes over their Connecticut clients’ accumulated debt loads. Under the new debt settlement plan, you will make regular payments to the firm, which in turn will pay back the creditors until you are completely without credit card and other unsecured debts in less than five years or sixty months. While, unfortunately, not every Connecticut borrower would be accepted into a debt settlement program – not all lenders shall agree to participate in negotiations – the potential for assistance absent the costs and loss of property Chapter 7 bankruptcy now entails should lead every wise Connecticut resident worried about their spiraling debt loads to at least investigate the approach. Every debt situation is different and, without analyzing the borrowers’ specific situation, it would be irresponsible for your authors to recommend one debt relief strategy above another. However, after talking to countless Connecticut debtors who’ve tackled their unpaid loans (both successfully and otherwise), we certainly would hope that appropriate Connecticut residents attempting to eliminate their credit card balances at least look into debt settlement before rushing headlong toward a potentially disastrous bankruptcy solution.
Article Source: http://www.articlesbase.com/finance-articles/bankruptcy-in-connecticut-760017.html
About the Author
My name is Cole Collins I am a professional in the financial fields of bankruptcy and debt settlement.
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