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What to know about bankruptcy

On Behalf of | Feb 20, 2018 | Chapter 7 Bankruptcy |

There were 844,495 bankruptcy cases filed in 2015 in Virginia and throughout the country, and 97 percent of those cases were filed by individuals. Those individuals had a median income of $34,392 and median expenses of $30,972 when they filed. In the past, those who filed for bankruptcy may have been seen as people who were irresponsible with their money. However, the system exists to allow people to take risks in a capitalist society.

In most cases, those who file for bankruptcy have no legitimate means to pay their debts. In 2016, 95.5 percent of the nearly 500,000 Chapter 7 bankruptcy cases that were filed resulted in debtors having their debts discharged. Chapter 7 cases require individuals to liquidate non-exempt property and use the funds raised to pay off creditors. Of bankruptcy cases filed in 2015, 63 percent were Chapter 7 filings.

Another option may be to file for Chapter 13 bankruptcy. This is when a person uses regular wages to pay off debts under a payment plan. If balances remain after the three- or five-year repayment period ends, those debts are generally forgiven. Individuals may be required to opt for Chapter 13 protection if they make too much money or if they want to protect property that may not be exempt in a Chapter 7 case.

Those who file for Chapter 7 bankruptcy may be entitled to an automatic stay from creditor contact. They might also be entitled to have debts discharged without having to give up property such as a home or car. Those who wish to file for bankruptcy may benefit from talking with an attorney to learn more about how to file or qualify for Chapter 7 bankruptcy protection.