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Michael D. Hart, P.C.
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Why debtors choose to seek bankruptcy protection

Virginia residents who are experiencing financial difficulties may use bankruptcy as a way to get control over their debts. Prior to bankruptcy, courts require the filer to take a credit counseling course. Furthermore, it's necessary to take continuing education courses after filing.

There are three common forms of bankruptcy, and a debtor will choose a type based on the circumstances of their case. Chapter 7 bankruptcy involves liquidating eligible assets and using the money to pay off creditors. Chapter 13 allows debtors to reorganize their debt and repay it over the course of three or five years. Chapter 11 bankruptcy is generally used by businesses to reorganize their debt, but it can also be used by those who have too much debt to qualify for Chapter 13 protection. During a Chapter 11 or 13 case, a debtor will generally need to ask permission from the trustee to take on new debt.

There are many reasons why a person may file for protection from creditors. For instance, falling housing prices combined with owners who couldn't make mortgage payments led to many bankruptcies. Student loan, credit card balances and medical debt could also contribute to a person filing for bankruptcy. If a person loses a job, there might not be enough money to pay those debts without help.

By filing for Chapter 13 bankruptcy, a person may be able to keep property while working out payment terms on secured debts. It may also be possible to have unsecured debt balances discharged at the completion of the repayment term. Creditors generally cannot contact debtors while a case is open. An attorney could talk more about credit counseling and other requirements that need to be met in a bankruptcy case.

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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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