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Bankruptcy

 


Who files for bankruptcy in Virginia?

What should I avoid in a bankruptcy filing?
Will I qualify for a Chapter 7 bankruptcy?
What is an automatic stay?
What is a discharge?
What is a nondischargeable debt?
What documents will I need to get started?

CHAPTER 7 BANKRUPTCY IN VIRGINIA
Federal bankruptcy law, Title 11 of the U.S. Code, provides every American with the right to erase debt and gain a fresh start with their finances. For many of our clients it is the first step towards rebuilding stability for their families.

In a Chapter 7 Bankruptcy the court will determine if you have sufficient disposable income to pay your creditors. A Chapter 7 will allow you to keep all exempt (legally protected) property. Our attorneys will carefully review your assets with you to determine which items are exempt. Chapter 7 bankruptcy is often referred to as “liquidation” bankruptcy – it can cancel most of your debts, but you are required to let the trustee liquidate (sell) your nonexempt property for the benefit of your creditors. As it turns out, most people who file for Chapter 7 do not have nonexempt assets and the trustee is able to list the bankruptcy as a “no asset” case.

Chapter 7 bankruptcy may be an option for you if the following criteria apply:

• You have limited or no income
You have no assets other than your furniture, personal affects and household goods
You are struggling to pay monthly expenses- credit cards, medical bills, living expenses
You rent your home
You own your home but do not have more than $5,000 equity in your property

CHAPTER 7 MEANS TEST
One of the recent changes in the bankruptcy law requires debtors to pass a means test. The means test requires petitioners to compute their average gross income during the six months prior to the bankruptcy filing. If your income is at or below the average income in Virginia, you may qualify to file a Chapter 7 bankruptcy. If your income is higher than the median, you must answer a series of questions (called the “means test”) designed to calculate your disposable income and your ability to pay some of your unsecured debts over time. Fortunately, more than 90% of potential Chapter 7 petitioners are able to pass the “means test.” If you are unable to pass this requirement, you may qualify for a Chapter 13 bankruptcy repayment plan.

THE AUTOMATIC STAY
The filing of a petition for bankruptcy instantly creates a federal court order (called an “Order of Relief” or an “automatic stay”) that requires your creditors to stop all collection efforts. This protection is a welcomed relief for debtors who have been subjected to months of harassment by creditors demanding payments or threatening lawsuits. Temporarily, the “stay” prevents creditors from calling, writing, garnishing wages, repossessing your car or cutting off utility service.

 

Who files for bankruptcy in Virginia?
Studies show that the most common reasons that individuals and families file for bankruptcy protection are:

• Divorce or legal separation
• Unexpected job loss, and the inability to find a new job with a similar salary and benefits
• Medical expenses that are not reimbursed by insurance
• Small business failures

During these turbulent economic times, major life changes can derail otherwise stable households. Bankruptcy is a legitimate aspect of our legal system. It is premised upon the concept of forgiveness as opposed to retribution. Bankruptcy is an opportunity to free yourself from the credit crunch and renew your emotional and financial outlook.
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What should I avoid in a bankruptcy filing?
You should always avoid inflating or overestimating your household expenses. The Bankruptcy Court reviews the expenses you list in your budget summary. If an item does not appear reasonable, the Trustee can request documentation to support the expense. This could delay or even jeopardize your petition if the expense is undocumented.
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Will I qualify for a Chapter 7 bankruptcy?
This question can only be answered after our attorneys have carefully reviewed your individual circumstances during an in-house consultation. However, you should contact our office if any of the following criteria apply to your situation:


• You are struggling to pay monthly expenses—credit cards, medical bills, living expenses
• You have very few assets other than your furniture, personal affects and household goods.
• You rent your home
• You own your home but have less than $5,000.00 equity in your property
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What is an automatic stay?
The filing of a petition for bankruptcy instantly creates a federal court order (called an “Order of Relief” or an “automatic stay”) that requires your creditors to stop all collection efforts. This protection is a welcomed relief for debtors who have been subjected to months of harassment by creditors demanding payments or threatening lawsuits. Temporarily, the “stay” prevents creditors from calling, writing, garnishing wages, repossessing your car or cutting off utility service.
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What is a discharge?
A discharge is a term used to describe the release of a debtor (the petitioner) from personal liability for certain debts.
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What is a nondischargeable debt?
Nondischargeable debt refers to debt that cannot be eliminated in bankruptcy. Examples include a home mortgage, debts for alimony or child support.
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What documents will I need to get started?
You should bring the following documents with you for your complimentary consultation:

• Payoff statements for cars and mortgages
• A current list of your household expenses
• A recent pay stub from your employer
• Tax assessments for property you own
• Copies of tax returns for the past two years
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