Bankruptcy could be an effective way for individuals in Virginia and elsewhere to get a handle on their finances. However, there are many factors an individual should consider before doing so. For instance, the type of debt a person has may determine if bankruptcy is right for that individual. If a person is unable to cover basic expenses each month, it may be time to file for protection from creditors.
Those who have missed multiple credit card or other debt payments may also want to consider filing for bankruptcy. This is because their credit score may have already taken a hit, which means that taking such a step might not hurt them that much. Filing for bankruptcy could also put a stop to a repossession, foreclosure or a planned creditor lawsuit. Tenants may be able to temporarily postpone an eviction by opting to take this step.
Individuals will generally choose between Chapter 7 and Chapter 13 bankruptcy. In a Chapter 7 case, eligible assets are sold in an effort to pay off existing debts. In a Chapter 13 proceeding, debtors repay secured and unsecured balances over a period of three or five years. The amount of the payment is based on what a court believes an individual can afford to give to creditors each month.
Filing for Chapter 7 bankruptcy may allow a person to obtain debt relief in a matter of weeks or months. In some cases, debts might be discharged even if an individual doesn’t have enough money or assets to pay them in full. Other benefits to bankruptcy may include a stay of creditor collection activities and the ability to retain property. An attorney may be able to further explain the benefits of filing and how to qualify for a liquidation bankruptcy.