When people cannot pay their bills, they often consider filing for bankruptcy. If you live in Kansas and are having financial problems, bankruptcy may be able to help you get back on track and relieve some of your stress. However, it is important for you to understand how the process works and what to expect before you take any action. This blog post explores the aspects to consider and steps to take when filing for bankruptcy in Kansas. Keep reading to learn more!
What Is Bankruptcy?
Bankruptcy laws give people who have no ability to pay their creditors a fresh start by liquidating their assets or creating repayment plans.
Bankruptcy laws serve the following purposes:
- Provide a “fresh start” to an honest debtor by relieving them of most of their debts
- Repay debtors in an orderly manner if they have a property available for payment.
Signs that You May Need to File for Bankruptcy
When considering bankruptcy, it’s important to know that it’s not a suitable option for everyone.
Here are some signs that you may need to file for bankruptcy:
- You’re unable to keep up with your mortgage payments.
- You’re constantly being called by debt collectors.
- You’re being threatened with foreclosure.
- You’re unable to work a payment plan with your creditors.
- You’re using your credit cards to pay for rent and food.
Is Bankruptcy the Only Option?
It’s essential to weigh all your options before considering bankruptcy. Alternatives to bankruptcy can include settling your debts or taking credit counseling. An advisor can help you determine which option is best for you.
By consolidating your debt, you will be able to reduce your monthly payments. As a result, you will save money on interest and repay your debt more quickly. It is also possible to negotiate directly with your creditors. Getting to an agreement can be challenging, but it will save you from bankruptcy if you are able to do so.
The Types of Consumer Bankruptcy
There are two main types of bankruptcies available for individuals in Kansas: Chapter 7 and Chapter 13.
Chapter 7
Most often, Chapter 7 bankruptcy is the first option a bankruptcy filer considers, as it takes only a few months to complete and is inexpensive because creditors don’t get paid. Moreover, it is a good option for people with only the essentials for living and working.
The opposite is true for people who own unnecessary luxury items. Finally, Chapter 7 bankruptcy does not allow you to catch up on mortgage or car payments, so you may lose them if you’re behind.
Chapter 13
Chapter 13 filers, in contrast, have three to five years to repay their debts. The benefits of Chapter 13 are different from those of Chapter 7. As an example, you can avoid foreclosure and car repossession while keeping all your property. A payment plan can be negotiated with your creditor if you cannot discharge the debt in bankruptcy.
How to File for Bankruptcy in Kansas
Some people avoid bankruptcy because they worry they won’t be able to afford a lawyer. Yes, it’s expensive to hire a bankruptcy attorney, and it’s the highest cost when it comes to filing for bankruptcy in Kansas. Fortunately, you do not need a bankruptcy attorney to file bankruptcy on your own.
Below are the steps to do so.
- Gather Your Kansas Bankruptcy Documents: This includes a copy of your tax returns from the previous two years and paycheck stubs from the last 60 days.
- Take a Credit Counseling Course: Enroll in a course here.
- Fill Out the Bankruptcy Forms: You can download the forms free through USCOURTS.gov.
- Pay Your Filing Fee: Kansas charges $338 for Chapter 7 bankruptcy filings. You can request a fee waiver if you earn less than 150% of the poverty guidelines and cannot afford the filing fee.
- Print Your Bankruptcy Forms: Print all forms on regular, white 8.5″ x 11″ paper using black ink.
- File the Forms With the Kansas Bankruptcy Court: Kansas Bankruptcy Courts are located in Kansas City, Topeka, and Wichita.
- Mail Documents to Your Trustee: You will be assigned a trustee after filing for bankruptcy.
- Take Another Course: Take a debtor education course within 60 days of the 341 meeting.
- Attend Your 341 Meeting: This is also called a creditors’ meeting, where your creditors attend and ask questions.
What Happens After You File for Bankruptcy in Kansas?
By declaring bankruptcy, most of your unsecured debts will be discharged. However, some debts, such as student loans, child support, and alimony, cannot be discharged in bankruptcy. Depending on your bankruptcy choice, some assets may also have to be given up.
How Does Bankruptcy Affect Your Credit Score?
Bankruptcy will appear on your credit report for seven to ten years following the filing. Your chances of being approved for a loan or credit line may be reduced as a result.
Rebuilding Your Credit Following Bankruptcy
Despite what many people believe, bankruptcy does not mean your financial future will be destroyed.
The following efforts can help you rebuild your credit:
- Taking out a small loan.
- Making on-time payments.
- Signing up for a secured credit card.
- Maintaining a good payment history.
- Regularly monitoring your credit report for errors.
- Becoming an authorized user on a credit card.
Sell Your House for Cash & Avoid Bankruptcy in Kansas
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