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Michael D. Hart, P.C.
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chapter 13 bankruptcy Archives

How to fix the bankruptcy system

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.

Income and debt limits for filing chapter 13 bankruptcy

Virginia residents may be interested in knowing that although there is no income limit set in order to file for Chapter 13 bankruptcy, there is a limit to the amount of debt one can have. For a person to be able to file for Chapter 13 bankruptcy, their debt must be less than $394,725 in unsecured debt. It cannot be more than $1,184,200 in secured debt.

Bankruptcy can help forestall foreclosure

The subprime mortgage crisis is still fresh in the memory of many Virginia residents. Thankfully, the nation has recovered from the various factors that aligned to create that situation. However, it is not unusual for families to be living paycheck to paycheck and one unexpected downturn away from financial disaster. Too often, homeowners simply give up and do nothing, but there may be options available even in the most dire of circumstances.

The debts that can be discharged in bankruptcy

Virginia residents who are planning on filing for bankruptcy have different methods available. For those with a steady income, a Chapter 7 case involves liquidating assets and using the money to repay creditors. A Chapter 13 case involves reorganizing current debts and repaying them over the course of several years. At the end of the repayment period, the remaining debt could be discharged. Generally speaking, only those who meet the income threshold in the state can file for Chapter 7 bankruptcy.

Cancer survivors likely to have more medical debt

Anyone in Virginia who has to deal with an unexpected illness may have issues with medical debt at some point. However, financial burdens related to cancer can be even greater, especially for younger survivors. Research presented in a peer-reviewed journal further notes that privately insured cancer survivors with high-deductible plans but no health savings accounts were even more likely to face financial hardship related to medical expenses.

Fewer bankruptcy filings may not mean rosy finances

Bankruptcy cases in Virginia and across the country are on the decline, but the reasons why may be more complex than they first appear. According to a report by Supreme Court Chief Justice John Roberts, bankruptcy filings have reached their lowest point in 10 years. While nearly 1.6 million filings were made in 2010, amid the widespread financial crisis, that number was halved by 2018. During the year, approximately 770,000 cases were filed in bankruptcy court, reflecting both corporate and consumer plans. The vast majority were filed by consumers, comprising 97 percent of the total.

Older Americans are filing for bankruptcy more frequently

An increasing number of older Americans are filing for bankruptcy in Virginia and across the country, even as bankruptcies overall appear to be on the decline. While 1.6 million people filed for personal bankruptcy in 2010, that number had reached only 789,000 by 2017, illustrating the changing state of the national economy. Still, the overall numbers may not clearly show some of the demographic differences that exist in bankruptcy trends. By 2016, 12 percent of all bankruptcy filings were made by people over 65, a proportion that rested at only 2 percent in 1991. The bankruptcy rate declined for people under 55, but shot up for those above that age.

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.

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