April 17, 2019
If you’re strapped for cash and unable to pay your bills at the end of the month, filing for bankruptcy in Kansas can help you get back on track. The first step toward financial well-being is understanding the differences between filing for Chapter 7 or Chapter 13 bankruptcy.
Next, you’ll want to know:
- whether your income qualifies for the bankruptcy chapter you’ve chosen, and
- if you can protect your property using bankruptcy exemptions.
Not only will this article explain these concepts, but it will help you locate information that can be difficult to find, such as official bankruptcy forms, Kansas means test figures, credit counseling providers, your local bankruptcy court, and the exemption laws you’ll use to protect property in a Kansas bankruptcy.
Qualifying for Bankruptcy in Kansas—Means Testing
In bankruptcy, the means test determines whether you meet the qualification requirements of a particular chapter.
- Chapter 7 bankruptcy. You’ll meet income qualifications if you pass the “means test.” The first step is determining whether your household income is lower than the median income of your state. If it is, you pass and can receive a discharge in a Chapter 7 case. You might still pass the means test after completing the second portion, which involves subtracting allowed expenses from your income. If, after doing so, you don’t have enough discretionary income to make a meaningful payment to creditors, you’ll qualify for Chapter 7.
- Chapter 13 bankruptcy. If your income exceeds the Chapter 7 limits, you can repay some or all of what you owe in a five year Chapter 13 repayment plan. The tricky part here is that you must have enough income to pay all required debts. To determine your Chapter 13 bankruptcy payment, you’ll do a calculation similar to that in Chapter 7. You’ll pay the greater of your disposable income, the value of your nonexempt property, or the amount of your nondischargeable debt (such as support obligations and tax debt). If you qualify for Chapter 7 but want to file Chapter 13 to take advantage of its unique mechanisms, such as saving a home from foreclosure, you can shorten the plan length to a three-year plan.
The necessary income charts and expense guidelines are on the U.S. Trustee’s website (select “Means Testing Information”).
Protecting Property With Kansas Bankruptcy Exemptions
Most people want to know whether they’ll be able to keep their property in bankruptcy. You’ll find out which assets you can protect by reviewing Kansas’s bankruptcy exemption law.
A list of federal bankruptcy exemptions exists, too, but Kansas doesn't allow residents to choose between the two lists. You’ll use Kansas’s bankruptcy exemptions, and the federal nonbankruptcy exemptions if they’re helpful.
The bankruptcy chapter you file determines the fate of nonexempt property (assets you can’t protect with an exemption):
- In a Chapter 7 bankruptcy, the trustee appointed to manage your matter will sell any nonexempt property and distribute the proceeds to creditors according to the bankruptcy payment rules.
- By contrast, you can keep all of your property in a Chapter 13 bankruptcy. But, there’s a catch. You must pay the nonexempt property value to your creditors through the three- to five-year Chapter 13 repayment plan.
- Spouses who file together in Kansas can double the exemption amount in each category (except for the homestead) as long as both spouses have an ownership interest in the property.
Kansas’s Bankruptcy Exemption List
Here are some commonly used Kansas bankruptcy exemptions. Unless indicated, all references are to the Kansas Statutes Annotated (Kan. Stat. Ann.) which you’ll find on the Kansas Legislature website.
Kansas Homestead Exemption
You can protect the entire value of the real property or mobile home that you occupy up to one acre if located in a town or city or up to 160 acres if located on a farm. (Kan. Stat. Ann. § 60-2301.)
Kansas Motor Vehicle Exemption
Up to $20,000 of equity in a motor vehicle that you regularly use to get to and from work. If the vehicle is equipped to assist with a disability, you can protect the full, unlimited value of the vehicle. (Kan. Stat. Ann. § 60-2304(c).)
Other Bankruptcy Exemptions in Kansas
- Insurance benefits. Life insurance proceeds if the debtor files bankruptcy more than a year after the policy went into effect (Kan. Stat. Ann. §§ 40-414, 60-2313(a)(7)); fraternal society benefits (Kan. Stat. Ann. § 60-2313(a)(8)).
- Personal property. Furnishings, clothing, earned income tax credits, and supplies, including food and fuel, that are in your possession and are reasonably necessary at your residence for up to one year; jewelry up to $1,000 in value; burial plot or crypt. (Kan. Stat. Ann. § 60-2304.)
- Pension, retirement, and life insurance benefits. ERISA-qualified benefits, IRAs and Roth IRAs and federal government pension needed for support and paid within three months prior to filing bankruptcy (Kan. Stat. Ann. § 60-2308.); 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 (Kan. Stat. Ann. § 60-2312.). Qualified retirement accounts are exempt under the federal rules and can be used in every state, regardless of the exemption scheme used. For current amounts, see Your Retirement Plan in Bankruptcy. You might also be able to claim federal nonbankruptcy exemptions for retirement benefits.
- Public benefits. Earned income tax credit. (Kan. Stat. Ann. § 60-2315.)
- Wages. 75% of disposable earnings or 30 times the federal minimum wage (whichever is greater). (Kan. Stat. Ann. § 60-2310.)
- Tools of the trade. Books, furniture, tools, and supplies used in your trade or profession, up to $7,500. (Kan. Stat. Ann. § 60-2304.)
Find a more detailed list of Kansas bankruptcy exemptions.
Verify Exemptions Before Filing
Kansas offers other exemptions and adjusts exemption amounts periodically. For the latest figures and to ensure that you’re using all exemptions available, check the Kansas statutes on the website for the Kansas Legislature.
More Kansas Bankruptcy Information
You’ll use this information when you’re ready to prepare your paperwork and file your case.
Kansas Credit Counseling and Debtor Education Information
Individual filers must take two financial courses—one before filing and another before receiving a discharge (debt forgiveness). Approved providers are listed under “Credit Counseling & Debtor Education” on the U.S. Trustee’s website (be sure to scroll down to your district).
Bankruptcy Costs, Filing Fees, and Forms
Most people must pay something to file for bankruptcy, but it’s usually worth the cost. Here’s what you can expect.
- Official bankruptcy forms. Before the Kansas bankruptcy court wipes out qualifying debt, you must disclose all aspects of your financial situation—income, expenses, property, debt, and property transactions—on official bankruptcy forms. These forms are free. After filling out the bankruptcy forms online on the U.S. Bankruptcy Court forms webpage, you’ll file your paperwork in your local bankruptcy court.
- Bankruptcy filing fees or fee waiver. You’ll pay a filing fee when you file your paperwork with the court unless you qualify for a fee waiver. Find out about both in Bankruptcy Filing Fees and Costs.
- Bankruptcy lawyer fees. The cost to hire a lawyer varies depending on the area. Many people benefit from retaining counsel. Find out the benefits of being represented by an attorney.
Kansas Bankruptcy Court Website and Locations
On the Kansas Bankruptcy Court website, you’ll find the court’s local rules and instructions for filing your paperwork (click on “Filing Without an Attorney”). The District of Kansas has three divisions. The court clerk will assign a court based on your county of residence.
|U.S. Bankruptcy CourtRobert J. Dole Courthouse
500 State Avenue, Room 161
Kansas City, Kansas 66101(913) 735-2110
|U.S. Bankruptcy CourtFrank Carlson Federal Building
444 SE Quincy, Room 240
Topeka, Kansas 66683(785) 338-5910
|U.S. Bankruptcy CourtWichita U.S. Courthouse
401 N. Market, Room 167
Wichita, Kansas 67202(316) 315-4110
While this overview can help you find some of the information you’ll need to prepare your bankruptcy paperwork, you’re responsible for understanding how bankruptcy law works before filing. To learn more about the law and procedure, consider purchasing a do-it-yourself book like How to File Chapter 7 Bankruptcy by Attorney Cara O’Neill and Albin Renauer J.D.