If you have large amounts of debt that you have been unable to resolve on your own, filing for bankruptcy may be an option. But filing for bankruptcy can be an intimidating and intensive legal process, and one that you may have many questions about. At the Law Office of Steven D. Barnette, P.C., our bankruptcy lawyer in Virginia can provide you with answers to all of your questions. Consider some of the most frequently asked questions we hear below, and call our law office directly if you’d like to learn more or are ready to initiate your bankruptcy filing–
Most people want to know what will happen to their debt if they file for bankruptcy, with some people assuming that all debts will be wiped out. While a number of debts may be dischargeable, especially if you file for a Chapter 7 bankruptcy, bankruptcy will not eliminate all types of debts and, before debts can be discharged, non-exempt assets will need to be liquidated. Types of debts that typically cannot be discharged include student loans, child support, and alimony. Taxes usually are also not dischargeable.
Additionally, it’s important to know that if you file for Chapter 13 bankruptcy, you will enter into a repayment plan with your creditors rather than have your debts discharged. This can be advantageous in the long-run.
While businesses can file for Chapter 7 bankruptcy (as can individuals), Chapter 13 is reserved for individuals only. If you are a business owner who has questions about your options for filing for bankruptcy, it’s best to consult with an attorney.
There are two common types of bankruptcy for individuals: Chapter 7 and Chapter 13. Each has its benefits; however, the type of bankruptcy that you file for likely won’t be a choice, but instead will be based on which bankruptcy type you’re eligible for.
Also called liquidation bankruptcy, in a Chapter 7 bankruptcy, your non-exempt assets, such as a second vehicle or home, will need to be liquidated and the proceeds will need to be used to pay off a portion of your debts. At the completion of the bankruptcy process, your dischargeable debts will be wiped off your record. The bankruptcy filing will stay on your credit report for 10 years. In order to file for a Chapter 7 bankruptcy, a debtor must pass the means test.
A Chapter 13 bankruptcy, on the other hand, is designed to help the debtor pay off some of their debts in order to get back on their feet. While fewer debts will be discharged in a Chapter 13, there are some benefits – for example, in a Chapter 13 bankruptcy, a debtor is more likely to be able to keep their home or vehicle. The debtor will work with the courts and creditors to establish a repayment plan that will last for between three and five years. After the repayment plan has been completed, remaining debts will be discharged. A Chapter 13 bankruptcy will remain on your credit report for seven years. You do not have to pass a means test to file for a Chapter 13 bankruptcy.
While bankruptcy is designed to give you a fresh start, things happen, and you may once again find yourself drowning in debt. If this happens to you, you may be wondering whether or not you have the option of filing for bankruptcy a second time. The answer is: you do. There is no minimum amount of time that you must wait before filing for bankruptcy a second time; however, there is a rule for how much time must pass between each bankruptcy discharge. As such, if you file too soon after your previous case, you won’t be eligible for a discharge. For a Chapter 7 bankruptcy, eight years must pass; for a Chapter 13 bankruptcy; two years must elapse.
One of the most beneficial parts of the bankruptcy process is that upon filing for bankruptcy, the automatic stay will go into effect. The automatic stay is a legal bar or hold on any creditor’s attempt to collect debt, including contacting you about any of your debts. Creditors cannot resume their debt collection efforts until the automatic stay has been lifted. Again, the automatic stay goes into effect as soon as you file for your petition for bankruptcy – this can be a huge relief for those debts who feel they cannot handle another call or letter in the mail from a debt collector and feel as though they have no other options.
Working with a bankruptcy attorney is not required, but it is recommended. For both Chapter 7 and Chapter 13 bankruptcy filings, there are a number of legal requirements that you must satisfy in order for your case to proceed. A bankruptcy attorney can help you by:
- Determining which type of bankruptcy you’re eligible for and which is most appropriate for your case;
- Helping you to gather all financial documents;
- Assisting you in preparing your bankruptcy petition;
- Advising you of all necessary steps you must take, such as attending credit counseling;
- Representing you during the bankruptcy hearing;
- Advising you after the bankruptcy action has been approved; and
If you are thinking about filing for bankruptcy, your first step should be to gather all of your financial documents and consider whether or not any other options exist, such as debt consolidation. If you have already tried other options, your next step should be to schedule a consultation with a bankruptcy lawyer.
At the Law Office of Steven D. Barnette, P.C., our Virginia bankruptcy attorney cares about you. We know that filing for bankruptcy may be embarrassing and complicated – we are here to represent you without judgment. Call our law firm today to get started.