When you decide to file bankruptcy in Kentucky, you will usually choose between Chapter 7 and Chapter 13. If you fail the means test for Chapter 7, you will have to file Chapter 13. You may also choose to file Chapter 13 because it gives you a chance to retain assets, such as your vehicle and your home, securing a debt. In this type of bankruptcy, you will create a plan to pay back your debts instead of the court simply wiping out your debts so you owe nothing.

The bankruptcy plan, according to the U.S. Courts, provides a schedule and details on how you will repay your debts. You and the court use the plan to know what monthly payments you will pay your trustee. The trustee then divides that money amongst your creditors.

Your plan may not provide for paying the complete amount of debt to every creditor. Certain creditors, such as those with whom you have a secured debt, must receive a certain amount. Other creditors are towards the bottom of the list and will receive money only if it is leftover from paying higher priority creditors. The amount you pay as part of your plan each month depends on your disposable income. Some creditors may receive no payments if your disposable income is not high enough.

You will follow the plan for three to five years, depending on your income. At the end of that time, the bankruptcy court discharges your case and any remaining debt not paid off through your plan. This information is for education and is not legal advice.