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Roanoke Virginia Bankruptcy Law Blog

Understand how property is handled in a Chapter 7 bankruptcy

One of the questions that comes up often when a person is facing a bankruptcy is what assets they'll be able to keep. There are some very specific federal guidelines that you should know if you're considering a Chapter 7 bankruptcy. This is the form of bankruptcy that doesn't require you to make payments to the bankruptcy trustee, but any nonexempt assets that you have are liquidated to pay off creditors.

The exempt property that an individual can have includes very minimal assets. These assets can also be impacted by state laws so it's best to work very closely with your attorney to find out exactly how these statutes apply to you. For example, the amounts are typically doubled for individuals who are married as long as they file a joint income tax return. Exempt property includes:

  • Up to $4,000 for a vehicle
  • $25,150 for a homestead
  • Up to $13,400 for personal property but this is subject to a $625 limit per item
  • Up to $1,700 in jewelry
  • Up to $1,325 in property, and up to $12,575 of any unused homestead exemption
  • Certain retirement benefits and insurance plans
  • Child support, alimony, and public benefits

Preparing a Chapter 13 bankruptcy can be complex

Realizing that you can't handle the credit payment you're supposed to make is harrowing. This can come from a variety of reasons, including job loss or illness. Individuals who are in this position usually try to find ways that they can recover financially. This isn't always easy; however, filing a Chapter 13 bankruptcy might get you on the right financial track.

We know that this is a big step for most individuals. We want you to understand what filing this type of bankruptcy means. One of the most important things that you need to remember is that you'll be making payments to the bankruptcy trustee for three to five years to pay off as much of the debt as possible. Any assets that you own that are considered nonexempt will also be liquidated to cover the balances.

Know the impacts of filing Chapter 7 bankruptcy

A Chapter 7 bankruptcy filing is a way to get debt under control for some individuals. This is a serious step to take so you must ensure that you consider the pros and cons of taking it. There are several things that you should think about before you file so that you don't do something you'll regret.

One of the primary and immediate effects is that you won't be able to rely on credit. This is a big step if you've come to rely heavily on it to pay your bills. You'll have to lose all your credit cards, and you'll be unable to obtain new credit while your case is moving through the court system.

Does bankruptcy get rid of all your debt?

Struggling with debt is something that numerous people in Virginia and across the country experience. Even if you have typically done well with managing your financial affairs, a sudden event like a medical emergency or job loss could have left you in a position where you unexpectedly could not make ends meet financially. As a result, your savings soon dwindled while your outstanding balances seemed to remain the same.

Knocking back substantial debt is not easy to do, especially if you can only make the minimum monthly payments. Interest, penalties and fees can all make it seem as if the debt never goes down, or it may even grow. Now, you feel that bankruptcy may be the best option for you to handle your financial issues, but will it help with everything?

Handling the mortgage and arrearages during Chapter 13 bankruptcy

Realizing that you can't keep up with your debts is a very serious situation for many individuals. For homeowners who opt to file a Chapter 13 bankruptcy, figuring out what to do about the mortgage might be a priority. Be sure to think about these points when you consider your next steps.

First, you're going to have to keep up with the mortgage payments throughout the bankruptcy. If you have arrearages, those will be handled by the bankruptcy trustee using the payments you make to them. The arrearages that are paid might vary from what you actually owed. However, any arrearage that remains when your bankruptcy is finished is forgiven as long as you kept up on your payments during the case.

Know the ins and outs of a Chapter 7 bankruptcy

Many factors can lead a person to need to file for bankruptcy. When you don't make enough to pay for the debts you have, this is one option that can help you get control of your finances. One of the first things you'll have to do is to determine what form of bankruptcy protection you qualify for. We can work with you to determine this.

Some individuals will qualify for a Chapter 7 bankruptcy. This type doesn't require you to make payments to the bankruptcy court to pay down your debts. Instead, any nonexempt assets you own will be seized and liquidated to pay off as much of the debts as possible. Any remaining balances will be discharged when the case is done.

Important points you should know about a Chapter 13 bankruptcy

Coming to the realization that you need to file for bankruptcy is a serious matter. There are two types of consumer bankruptcy filings. One of these is a liquidation bankruptcy, Chapter 7, in which all your non-exempt assets are liquidated to pay off creditors. You don't have to make regular payments in this one.

When you file a Chapter 13 bankruptcy, you get to keep more of your assets. You will have to make regular payments on your debts to the trustee over the case. These continue for three to five years, but any balance remaining after you pay all the required payments will be forgiven.

Prepare for emotions that come with bankruptcy

Being in debt is a horrible feeling for many people, especially when they know they can't cover the bills. Individuals who opt to file for bankruptcy might assume that they are going to feel elated when they are able to do away with those debts. This might not be the case, however, as many people find some negative emotions creep up when they file.

Some people worry about the societal stigma of filing for bankruptcy protection. While this was a consideration in the past, it really isn't these days. Updates to the bankruptcy codes have made changes to ensure that only those who truly need the fresh financial start are able to move through the process and many people have already been there.

Are you one of many Virginia residents considering bankruptcy?

Living in Virginia can be expensive. If you've been raising a family in this state, you no doubt agree with that statement. The good news about financial challenges, however, is that most of them are temporary. When something causes unbalance on your money scales, it's important to consider whatever options might be available to get things back on track as soon as possible.

The type of options you choose may depend on the details of your particular circumstances. For instance, if you've gotten into the habit of overspending or living beyond your means, a viable option to restore financial stability might be to tighten your purse strings and shop with cash only. If your situation is a bit more dire, such as a recent job loss, divorce or medical emergency that has sparked financial crisis, you might want to pursue additional options.

Understand how foreclosure can be halted in a Chapter 13 filing

The Chapter 13 bankruptcy is one that's meant to help people who earn a living repay a portion of their debts in exchange for discharging the remaining balance once all the payments are made to the bankruptcy trustee. While you're making those payments, you'll have to keep up with your other bills. This means that things will be tight financially for a while.

We understand that this is a difficult time for you. We want you to know what options you have and how each might impact you. We're here to discuss your case with you so that you can evaluate things based on your circumstances.

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Michael D. Hart, P.C.
19 Church Street Southwest
Roanoke, VA 24011

Phone: 540-627-6520
Fax: 540-342-7655
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