March and April are prime months for bankruptcy as people commonly use their tax refunds to pay for the opportunity to do so. Virginia residents may be required to wait until they receive their tax refunds because it is the only way that they can afford to file at all. A debtor can expect to pay about $1,000 for attorney fees in addition to other costs. Typically, the attorney fee must be paid upfront.
The American Bankruptcy Institute has suggested that individuals be allowed to pay attorney fees over time. Another suggestion was to allow student loan debtors to eliminate their balances after a certain number of years. Today, there is no uniform mechanism by which such debt can be discharged. Instead, a debtor must show that he or she would experience a significant hardship by being required to continue making payments.
The consequences for those who are not able to file for bankruptcy can be dire. In some cases, debt collectors will seize the wages of those who fall too far behind on a debt. Individuals may also fall victim to shady individuals or businesses who aren't working in their best interests. Research has shown that minorities and those who have low incomes are the ones who typically experience negative consequences as a result of the current bankruptcy system.
By filing for Chapter 13 bankruptcy, a person may have an easier time managing overwhelming debt. In some instances, secured debts may be converted into unsecured debts. Generally speaking, unsecured debts are easier to discharge and may represent a small portion of an overall repayment plan. Debtors are generally allowed to keep a home, a car or other property throughout the course of a repayment period, which can last for either three or five years.