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Connecticut Bankruptcy Laws
For the 88% of those filing bankruptcy who choose Chapter 7, there are federal and state mandated exemptions they can claim to protect their home and property from liquidation. Connecticut residents may claim either state or federal exemptions, although they cannot mix them. The state exemptions debtors may claim include:
Homestead |
Up to $75,000 |
Personal Property |
Spendthrift trust funds; tuition savings accounts; motor vehicles to $3,500; food; clothing; health aids; burial plot |
Wages |
75% of wages earned but not paid or 40 times the state or federal hourly minimum wage, whichever is greater |
Pensions |
Tax exempt retirement accounts; traditional & Roth IRAs up to $1,095,000/person; state employees; municipal employees; teachers; medical savings accounts |
Public Benefits |
Unemployment; worker’s comp; veteran’s benefits; Social Security; crime victims’ compensation; public assistance |
Tools of Trade |
Military arms, equipment, uniforms, and musical instruments; books, instruments, and necessary farm animals |
Insurance |
Life insurance proceeds, dividends, interest, or cash value; fraternal benefits; health and disability benefits; Non-matured life insurance dividends, interest, or loan value up to $4,000 |
Once a debtor and their attorney determine the appropriate type of bankruptcy to file and the consumer has completed their required credit counseling, the petition is filed and the court puts a stay, or hold, on all debt collection. The court then processes the petition, the bankruptcy trustee investigates and administers a plan for the bankruptcy, and the creditors are informed of that plan in a required 341 hearing. Once the bankruptcy proceeding is complete, the Chapter 7 consumer is relieved of their debts to start again, and the Chapter 13 consumer is required to maintain their payments in order to retain their property.
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