Filing for bankruptcy is one of life’s major decisions. In this article, we will outline some major points which will help you once you decide to file for bankruptcy in Virginia.
Chapter 7 vs. Chapter 13
Chapter 7 focuses on discharging unsecured debts such as credit cards, personal loans, and medical bills. Chapter 7 will look at all the assets you own once your bankruptcy petition is filed. It will protect assets that are exempt and discharge most or all of your unsecured debt.
Chapter 13, often referred to as reorganization, is used to prevent a person’s properties from being sold. It creates a repayment plan to deal with any secured debt. Chapter 13 focuses on catching up with secured debts such as your home or car while also discharging unsecured debts.
Chapter 7 Bankruptcy Means Test
You have to pass a bankruptcy means test to be eligible for Chapter 7 bankruptcy. In this test, your average household income will be compared to the median income for similar households in Virginia. You will qualify to file for a Chapter 7 if your income is less than the median. If your income is higher than the median, you must show you cannot pay your debts with your current disposable income.
If you don’t pass the Chapter 7 means test, you can look into filing Chapter 13 instead. As stated above, a Chapter 13 plan allows individual debtors to reorganize their debts and repay them over 3-5 years with a payment plan.
To begin the bankruptcy process, you must first itemize the following:
1. Current income resources
2. Major financial transactions
3. Monthly living expenses
4. Secured debts
5. Unsecured debts
6. List of real estate
7. List of movable properties
8. Tax returns
9. Real estate deeds
10. Car titles
11. Loan documents
12. Bank statements that cover the bankruptcy filing date
13. Latest pay stubs
14. Your credit report
15. Creditor bills
16. Letters from debt collectors
There are lots of documents to gather and not all of them are needed to be filed in court but they will certainly help you fill out the information in the bankruptcy petition.
All US citizens are entitled to get a free yearly credit report. It can be requested online.
Credit Counseling Course
The 2005 Bankruptcy Act requires all individual debtors who file for bankruptcy to undergo credit counseling within six (6) months before filing for bankruptcy relief and to complete a financial management instructional course after filing for bankruptcy.
The Credit Counseling Course is required for you to learn about your options and for you to decide what is best suited for you. There is a fee to take the course but it can be waived if you qualify for the requirements.
Once you are done with the credit counseling course, a Certificate of Completion will be given to you which will then be filed along with the bankruptcy documents required for court.
Bankruptcy forms will have to be filled out. They are lengthy forms so make sure you don’t miss anything when filling them out. If you hire a Virginia Bankruptcy Attorney, you will probably fill out an informal form and your attorney will be the one who will fill out the actual bankruptcy petition for you.
When you file your documents, the clerk of court will require you to pay filing fees. In Chapter 7 bankruptcy, the filing fee is $338. For Chapter 13, the filing fee is $313.
Once the filing fee is paid, the court will assign you a case number.
An automatic stay goes into effect one a case number is given to you. An automatic stay is an injunction that prevents creditors from taking actions to collect debts from you. It stops people and companies that you owe from to get their money from you. This will also stop any foreclosure proceedings.
Virginia Bankruptcy Trustee
The court will assume legal control of your debts and all properties which are not covered by the exemptions. A trustee will be appointed to you by the court.
A trustee’s job is to see to it that your creditors are paid as much as possible. The trustee will thoroughly check and review your documents, assets, exemptions, and have the ability to challenge any issue in your case.
Filing for Bankruptcy
Once you have gathered all the documents you need to file for bankruptcy in Virginia, you can approach an attorney to help you sort the files. A bankruptcy attorney will also aid you in determining which property are exempt from seizure based on the Virginia Exemptions Chart.
Once that is settled, you or your attorney will file a bankruptcy petition along with some other forms at your designated Virginia District Bankruptcy Court.
In Virginia, there are two bankruptcy districts named the Western District and Eastern District. You will file your bankruptcy forms depending on the district you live in.
Filing for bankruptcy is a legal process which requires expertise. If you are drowning in debt and in need of help from a Fredericksburg Virginia Bankruptcy Lawyer, you can schedule a consultation with Attorney Tori Bramble at (540) 628-7340 or email us at email@example.com. You may also visit our website at www.bramblelawfirm.com.