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Michael D. Hart, P.C.
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540-627-6520
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Understanding Chapter 7 bankruptcy

Some Virginia consumers may find themselves overwhelmed by credit card debt. The efforts of credit card companies to collect on that debt usually begins with letters asking people to pay. However, once those debts go to a collection agency, the pressure may become overwhelming with calls and letters demanding payments. People might then begin to consider bankruptcy.

Chapter 13 bankruptcy is generally for wage earners and involves creating a repayment plan. A Chapter 7 bankruptcy is for a person who has no or little income and who does not have many valuable assets or assets with much equity in them. Chapter 7 allows the person to discharge most unsecured debts and start fresh. In a Chapter 7 bankruptcy, some assets are usually considered exempt from liquidation by the trustee.

One of the main disadvantages of bankruptcy is its effect on a person's credit score. It can cause a drop of around 200 points. Lenders consider a person with a low credit score a risk. The bankruptcy also remains on a person's record for 10 years. However, it is possible to begin rebuilding credit after filing for bankruptcy. People should pay bills on time and show they can be responsible with credit.

There are several advantages to filing for bankruptcy. One is that it stops all creditor action immediately. This means an end to everything from harassing phone calls to lawsuits. There are a few types of debt that generally cannot be discharged in a bankruptcy including certain taxes, child support and alimony. However, once a person has discharged other debts, it may be possible to create a budget that allows these obligations to be paid off as well.

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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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