Bankruptcy is a court-supervised legal process that helps people who can no longer pay their debts get a fresh start by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect financially troubled businesses.
In Kansas, as in all states, bankruptcy is governed primarily by federal law, specifically Title 11 of the United States Code, also known as the Bankruptcy Code. The process is designed to help individuals and businesses eliminate or repay their debts under the protection of the bankruptcy court. There are several types of bankruptcy filings, but the most common for individuals are Chapter 7 and Chapter 13. Chapter 7 bankruptcy involves the liquidation of assets to pay off debts, while Chapter 13 allows individuals with a regular income to develop a plan to repay all or part of their debts over time. Businesses may file for Chapter 11, which permits reorganization under the bankruptcy laws of the United States. Kansas has its own set of exemptions that determine what property is protected from sale during a Chapter 7 bankruptcy. These exemptions are found in the Kansas Statutes Annotated and can include equity in a home, personal property, and retirement accounts, among others. It's important for individuals and businesses in Kansas considering bankruptcy to consult with an attorney to understand how federal bankruptcy law and Kansas state exemptions will apply to their specific situation.