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Bankruptcy: Kansas

Filing bankruptcy in Kansas aims to achieve two things.  It gives honest debtors a chance to overcome crushing debt and may repay creditors to the extent that the debtor’s property value or earnings permit. 11,058 bankruptcies were filed in Kansas in 2010, ranking Kansas 32nd in the country for the number of bankruptcy filings per capita. 70% of Kansas’s bankruptcy petitions in 2010 sought protection under Chapter 7 bankruptcy.

Filing Bankruptcy in Kansas

Federal law governs bankruptcy proceedings in Kansas, and as such, all bankruptcy cases are filed in the US Bankruptcy Courts located in Kansas City, Topeka and Wichita.

Kansas law bans debtors from using exemptions listed in the U.S. bankruptcy code, so petitioners must apply Kansas bankruptcy exemptions to their case. With the guidance of a bankruptcy attorney Kansas debtors can be made fully aware of what personal property they are permitted to keep in bankruptcy, and what must be sold.

Chapter 7 Bankruptcy, Kansas

Chapter 7 bankruptcies in Kansas are the most common bankruptcy filing. Chapter 7 is preferable for petitioners who lack significant assets, such as investments or substantial equity in a home, since a Bankruptcy Trustee may liquidate personal property that isn’t protected by Kansas’s bankruptcy exemptions. Liquidation takes place when the Trustee converts personal assets to cash for distribution to creditors. Kansas’s Chapter 7 bankruptcy law allows debtors to keep some essential property and the exempt assets are strictly off-limits to creditors seeking repayment.

The vast majority of Chapter 7 cases are “no-asset” cases where no property is taken.

Kansas Bankruptcy Exemptions

Kansas bankruptcy law assigns specific property exemptions that permit debtors to retain certain personal property and assets so they may move forward from bankruptcy as productive members of society.  That is, the creditors cannot force debtors to sell the shirt off their backs.  Bankruptcy in Kansas permits petitioners to choose exemptions from the state list.

Property exemption values are subject to change, so it is recommended that individuals or couples considering bankruptcy seek the counsel of a Kansas bankruptcy attorney to discuss their options.  Kansas bankruptcy exemptions include:

Kansas Homestead Exemption

  • Unlimited value: Real property or mobile home you occupy or intend to occupy; property cannot exceed 1 acre in town or city or 160 acres on farm

Kansas Personal Property Exemption

  • Food and fuel to last 1 year
  • Clothing to last 1 year
  • Furnishings and household equipment
  • $1,000 total: Jewelry and articles of adornment
  • $20,000 total: Motor vehicle; No limit if vehicle is designed or equipped for disabled person
  • Funeral plan prepayments
  • Burial plot or crypt

Kansas Tools of the Trade Exemption

  • $7,500 total: Books, documents, furniture, instruments, equipment, breeding stock, seed, grain and stock
  • National Guard uniforms, arms and equipment

Kansas Wage Garnishment Exemption

  • 75% of disposable weekly wages or 30 times the federal minimum hourly wage per week, whichever is greater (Low-income debtors may be authorized for more)

Kansas Public Benefits Exemption

  • Social Security and General assistance
  • Workers’ and Unemployment compensation
  • Veterans’ benefits
  • Crime victims’ compensation

Kansas Insurance Exemption

  • Disability and illness benefits
  • Fraternal life insurance benefits
  • Life insurance proceeds
  • Cash value of life insurance; not exempt if obtained within 1 year prior to bankruptcy with fraudulent intent

Kansas Pensions and Retirement Savings Exemption

  • Judges, Elected and appointed officials in cities with populations between 120,000 and 200,000
  • Firefighters, Police officers, State highway patrol officers
  • Public employees, State school employees
  • ERISA-qualified benefits, IRAs and Roth IRAs
  • Federal government pension needed for support and paid within 3 months of filing for bankruptcy (only payments being received)
  • Payment under a stock bonus, pension, profit sharing, annuity or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for support

Kansas Miscellaneous Exemption

  • Alimony, maintenance and support
  • Liquor Licenses

Chapter 13 Bankruptcy, Kansas

In 2010, 30% of petitioners filed for protection under Chapter 13 bankruptcy laws in Kansas.  Filing Chapter 13 bankruptcy in Kansas begins a financial restructuring process whereby a court-appointed Trustee negotiates with creditors and implements a 3-5 year repayment plan, using the debtor’s future earnings to settle up with creditors.  Chapter 13 petitioners in Kansas keep most – or all – of their property.

How to File Bankruptcy in Kansas

One’s eligibility for property exemptions should play a significant role in deciding if bankruptcy is a practical answer to a debtor’s financial problems. The objective should be to find a solution that will preserve major assets and qualify debts for discharge. Because each bankruptcy case is unique, a Kansas bankruptcy attorney can help debtors understand their financial options and advise whether Chapter 7 or Chapter 13 bankruptcy are appropriate actions given their circumstances.

Bankruptcy Attorney: Kansas

It is the debtor’s responsibility to know their rights and obligations as bankruptcy petitioners.  A Kansas bankruptcy attorney can thoroughly explain the federal laws and state exemptions and how they impact bankruptcy petitioners.  Because personal bankruptcy cases can be complex and worrying, seeking the counsel and support of a trusted Kansas bankruptcy attorney is regarded as  a reassuring experience.