Virginia consumers who are struggling with insurmountable debt may file for personal bankruptcy in order to find relief. Chapter 13 bankruptcy is available for people with higher incomes than the threshold required for a Chapter 7 liquidation bankruptcy. It has some advantages, such as lasting a shorter time on a credit report as well as allowing people to keep property while a payment plan is set up for their debts. However, an open Chapter 13 bankruptcy can persist for several years while the payment plan is in place. During this period, people can still take out new loans and get new credit.
However, in order to do so successfully, they must get a court order authorizing them to incur additional debt. If they take out loans or other types of debt during the bankruptcy without getting this authorization, they could have the bankruptcy process dismissed. In order to get an authorization to incur debt, people need to obtain information about the loan laying out the interest rate, maximum term, monthly payment, and other key points. This document must first be submitted to the bankruptcy trustee.
The trustee will determine whether the person has a valid reason to take on the debt and whether he or she can continue to keep up with the payment plan in place. If so, it will then be submitted to the court. The creditors involved in the bankruptcy will also receive a copy of the motion and a hearing may be required in some cases.
There may be some added paperwork in the process, but it is still possible to buy a car or take on other new debt during a Chapter 13 bankruptcy. People can learn more by discussing their situation with an attorney.