Virginia consumers who are struggling with debt might wonder whether they should file for Chapter 7 bankruptcy. In order to file for Chapter 7, they must pass what is known as a "means test". This means that their income must be below a certain amount, which is usually the median income for the state. However, there are additional considerations in determining this income. For example, certain expenses may be taken into account and deducted from overall income to determine eligibility.
One advantage of filing for Chapter 7 bankruptcy instead Chapter 13 is that it is a much quicker process. Unlike Chapter 13, which requires a payment plan that lasts either three or five years, Chapter 7 bankruptcies are generally discharged in a few months. However, a person who makes too much money may be required to convert to a Chapter 13 bankruptcy from a Chapter 7 filing.
There are some disadvantages to filing for bankruptcy. One of the primary ones is the effect on a person's credit score, but this can be lessened over time. People who are considering doing so might want to first talk to their creditors and see if it is possible to work out a payment plan.
An attorney may be able to assist a person in understanding what options are available for debt relief and what rules exist around bankruptcy. For example, a person should also make sure it is possible to discharge the debts. Credit card and medical debts can be discharged in bankruptcy, but student loan debts usually cannot be. Child support debt also cannot be discharged. However, getting rid of other debt in bankruptcy may allow people to pay these off.