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Michael D. Hart, P.C.
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Understanding Chapter 13 bankruptcy options

People in Virginia who are facing insurmountable debt may look for relief from their situation by filing for personal bankruptcy. There are two major bankruptcy options for individuals: Chapter 7, or liquidation, and Chapter 13, or repayment. When a person files for Chapter 7 bankruptcy, a trustee is appointed by the court to liquidate the person's assets, using the proceeds to pay off some debts. After that liquidation, the person's remaining debts are discharged. It should be noted that, in general, neither type of personal bankruptcy is typically able to discharge student loan debt although it can address medical bills, credit card debt, loans and other types of personal debt.

On the other hand, Chapter 13 bankruptcy can be an important option for people whose income is above the federal means test maximum for Chapter 7. In addition, it can allow people to emerge from bankruptcy while keeping their home or another valuable item of property. Rather than liquidating assets, Chapter 13 bankruptcy is based on a five-year repayment period using a structured plan. The court specifies approved expenses and reviews the person's income, and any extra disposable income is expected to be directed toward debt repayment.

During this period, people in Chapter 13 are not permitted to make new financial decisions; instead, they must turn to the court for approval. If that person loses a job or otherwise suffers financial losses, he or she must return to court to revise the repayment plan, After the five-year period is over, any remaining debt will be discharged.

People who are facing increasing mountains of debt may be looking at any option to find a path to a new financial future. A bankruptcy lawyer may help people understand their debt relief options and make choices that can help them turn a new page.

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Roanoke, VA 24011

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