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Chapter 7 Bankruptcy in Virginia

Bankruptcy, a legal procedure guided by the federal law, is a process through which individuals or a business entity that cannot pay outstanding debts to creditors may seek partial or complete debt relief. The simplest and most common type of bankruptcy is chapter 7 bankruptcy. Upon filing chapter 7, in most cases, an automatic stay is put into place and creditors no longer have the right to proceed against the debtor unless the automatic stay is lifted by the court or by operation of law.

Chapter 7 bankruptcy is the legal process that allows a debtor to seek debt relief from creditors. The debtor is required to turn over any non-exempt property that exists to a trustee who then converts it to cash and pays the creditors while the debtor in turn receives a chapter 7 discharge. The trustee also receives a commission for overseeing the distribution. For no asset cases whereby all the debtor’s property is exempt by Law, the debtor must pay the filing fee and follow the rules of the bankruptcy court to be eligible for a discharge.

Advantages of Chapter 7 Bankruptcy in Virginia

  1. The bankruptcy process from filing to discharge takes about 3-6 months.

  2. You can eliminate heavy debt burdens and get a fresh start.

  3. You are protected from wage garnishment and other credit collection efforts from the date of filing for bankruptcy.

  4. Prevents and restores repossession of property and termination of utility services.

  5. Any earned income or acquired property received after the chapter 7 filing date is yours (with the exception of certain after acquired assets such as inheritances received within 180 days of the chapter 7) .

  6. There is no minimum amount of debt required.

What Debts are not Dischargeable in Chapter 7 Bankruptcy in Virginia?

Certain types of debts such as child support, spousal support, family support debts, student loans, fraudulent debts, certain taxes including recent income tax debts are generally not dischargeable. Your creditors can also choose to challenge your request to discharge certain debts such as loans, cash advances or credit purchases of $1,150 or more made between 60 days of filing. This means that after being discharged in the case of a chapter 7 bankruptcy, you will still have to duly pay these debts. For secured debts such as a car or house payment, you will need to continue to pay the debt if you will hold on to the secured property. You may reaffirm the debts with a voluntary “Reaffirmation Agreement”. The decision to reaffirm depends on the type of property secured by the debt. Most attorneys will not advise debtors to enter into reaffirmation agreements concerning real property because a debtor is essentially surrendering his or her discharge concerning the mortgage. Because of the risk involved in reaffirming mortgages, doing so is not in the debtor’s best interest. For personal property, such as a car, the debtor must enter into the reaffirmation agreement within 45 days of the first meeting of creditors.

Who Can File Chapter 7 Bankruptcy in Virginia?

Chapter 7 bankruptcy is available to individuals, couples, partnerships and organizations. The basis of eligibility is the Virginia means test. Anyone with an income lower than the Virginia median per household sizes can file a chapter 7 bankruptcy without having to take the test. However, high income filers with incomes higher than the Virginia median, whose debts are primarily consumer debts are required to take the Virginia means test to determine the possibility of paying back a part of their unsecured debts.

Bankruptcy in Virginia may be an option for you if you are having financial problems. It may offer you a chance to get back on track and plan for a debt-free life. Talk to a local bankruptcy lawyer today to get started.

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