Photo by RSS

Moving can be an adventure, especially when moving to another state. At Lawrence & Associates, a Kenton County Kentucky bankruptcy law firm, we have had many clients move to Kentucky only to find their financial fortunes have changed. Sometimes, clients move to Kentucky for a job that winds up being too good to be true. Other clients relocate from Cincinnati to Northern Kentucky in the middle of a major life event, such as divorce. Whatever the reason, moving to a new state can present financial challenges and sometimes those financial challenges lead to bankruptcy. If you are new Kentucky and are thinking of filing bankruptcy, you may be a little confused about where you should file. Is it better to file in Kentucky, or better to file in the state you just moved from? 

Have You Lived in Kentucky for More Than Six Months?

You must live in Kentucky for at least six months to be eligible to file bankruptcy here. If you’ve lived here less than six months, don’t worry – preparing to file a bankruptcy often takes a month or two all by itself, and the dates are all measured from when you actually file (not from when you first think about filing). There is an exception to this rule, but it only applies if you haven’t lived in any state for six months or more over the course of the last nine months.  If you’ve lived in Kentucky for six months, you have to file bankruptcy in Kentucky!

If You Haven’t Lived in a New State for 6 Months, Where Do You Have a Better Chance of Filing the Kind of Bankruptcy You Want?

Although bankruptcy laws are federal, different parts of the country have slightly different rules relating to (for example) the way you can protect your assets from the trustee or the amount you have to pay monthly in a Chapter 13 bankruptcy. Even relatively short distances – such as moving from Cincinnati to Northern Kentucky or vice versa – can have big consequences! If you are in a grey area where the difference of a month or two will change where you file your bankruptcy, you should ABSOLUTELY talk to a reputable bankruptcy attorney right away. Timing is important and you don’t want to wait the extra couple of months only to find out that you are in danger of losing  your car or home because you waited too long to file.

At Lawrence & Associates, we help people file bankruptcy every day. Further, we have the skill and expertise to help you decide which state’s bankruptcy rules would be better for you.

If you or someone you know need(s) to file bankruptcy and has recently moved in or out of Kentucky, contact Lawrence & Associates today!

Contact Us (859.371.5997) for a Free Consultation

When filing for a chapter 13 bankruptcy, a debtor is required to list his or her current monthly income on the chapter 13 Means Test. This is important because it allows for the calculation of both the debtor’s commitment period and the debtor’s disposable income. Due to the nature of the chapter 13 bankruptcy, it is sometimes beneficial to the debtor that his or her income be minimal rather than a greater amount. Therefore, it is crucial to know exactly what type of income needs to be listed and what type does not.

The Obvious

• Gross wages
• Salary
• Tips
• Bonuses
• Overtime
• Commissions

Form 22C indicates that “All figures must reflect average monthly income received from all sources derived during the six calendar months prior to filing the bankruptcy case, ending on the last day of the month before filing.” It is important to realize that if the debtor is married, than he or she must list the spouse’s income, regardless of whether or not it is a joint-bankruptcy.

Business Income

• Gross income derived from the operation of a business, profession, or farm

In re Wuilnau, the court held the where a debtor receives income from an LLC, that income needs to be included as part of the Current Monthly Income.2012 Bankr. LEXIS 1121 at *10-11 (Bankr. N.D. Ohio March 14, 2012).

Other Forms if Income

• Income derived from rentals or real property
• Interest, dividends, and royalties
• Pension and retirement
• Unemployment compensation (unless it was received by the debtor or the debtor’s spouse as a benefit under the Social Security Act)
• Other sources of income unless specifically excluded.

Certain transactions that have been held to not constitute income for purposes of a chapter 13 are…

• Loans
• One-time withdrawals from 401(k) or an IRA
• Sales of vehicles in a non-business context – In re Leach, the courts held that income derived from the sale of a vehicle used to purchase a newer vehicle was not income that needed to be included in the chapter 13 Means Test. 61 Collier Bankr. Cas.22d (MB) 15555, 2009 Bankr. LEXIS 1097 at 26 (Bankr. D. Mont. Feb. 26, 2009)
• Transitional bonus payments set off against loan (such as a pay advance)

If you or someone you know may need to file for a chapter 13 bankruptcy, contact Lawrence & Associates today!

Contact Us (859.371.5997) for a Free Consultation

A debtor is required to list his or her current monthly income on the chapter 13 Means Test when filing for a chapter 13 bankruptcy. This is important because it allows for the calculation of both the debtor’s commitment period and the debtor’s disposable income. Additionally, due to the nature of the chapter 13 bankruptcy, it is sometimes beneficial to the debtor that his or her income be minimal rather than a greater amount, so it’s imperative that one know exactly what type of income needs to be listed. Consequently, knowing what deductions are allowed to be included in a Chapter 13 bankruptcy is just as crucial. Generally, the Means Test follows the same National Standards set forth by the Internal Revenue Service (IRS) in the Internal Revenue Manual to calculate the allowable living expenses for all applicable persons. The applicable number of persons is the same number that would currently be allowed as exemptions on a debtor’s federal income tax return, plus the number of any additional dependents whom that debtor supports.

The IRS Definition of Necessary Expenses…

“Allowable expenses include those expenses that meet the necessary expense test. The necessary expense test is defined as expenses that are necessary to provide for a taxpayer’s and his or her family’s health and welfare and/or production of income. The expenses establish the minimum a taxpayer and family needs to live.” §15.1.7 at P 1,3.

• Food, Clothing, and Other Items – these generally include food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous. Taxpayers are allowed the total National Standards amount monthly for their family size.
• Healthcare – Calculated by using the number of applicable persons and the IRS National Standards for out of pocket health care.
• Housing and Utilities, Mortgage/Rent Expenses – Calculated by using the IRS Housing standards for the taxpayer’s county and family size. Housing expenses generally include mortgage (including interest) or rent, property taxes, necessary maintenance and repair, homeowner’s or renter’s insurance, homeowner dues, etc. Utility expenses include gas, electricity, water, heating oil, bottled gas, trash and garbage collection, phone and cell phone expenses, etc.
• Transportation, Vehicle Operation/Public Transportation Expenses

Calculating all these expenses is a rather convoluted process, as well as another reason why it is so important to consult with a Northern Kentucky bankruptcy attorney when considering filing for bankruptcy in Northern Kentucky.

If you or someone you know need(s) to file for a chapter 13 bankruptcy in Northern Kentucky, contact Lawrence & Associates today!

Contact Us (859.371.5997) for a Free Consultation