Bankruptcy “chapters”
There are two options under the Federal Bankruptcy code for filing personal bankruptcy in Virginia: Chapter 7 or Chapter 13.
Each offer legal protection, depending on your individual circumstances, and can help people who are overwhelmed with debt.
Boleman Law offers everyone a free consultation with a skilled, experienced bankruptcy attorney to review your financial situation and recommend the best options for your specific circumstances.
Chapter 7 and Chapter 13 within the Federal Bankruptcy Code deal with different types of personal or consumer bankruptcy.
Chapter 7 bankruptcy
Sometimes known as a “complete” or “straight” bankruptcy, Chapter 7 bankruptcy means that the person turns over all of their non-exempt assets or property (vehicle, house, savings, for example) to a bankruptcy trustee who liquidates it and distributes the proceeds to the unsecured creditors such as credit card companies, medical bills or loans. People can usually keep most of their personal property (jewelry, tools, clothing, for example).
In return the person is granted a “discharge” of the debt – the debt is cancelled. Some debt (spousal and child support, student loans and some taxes) cannot be discharged in bankruptcy. The process typically takes about six months.
Boleman Law will complete all of the complicated forms and paperwork for you and a Boleman Law attorney stands beside clients and speaks on their behalf at trustee hearings and in court. Knowledgeable people at Boleman Law are always available to help throughout the process.
Chapter 7 may be the best solution for you if you have:
- a large amount of unsecured debt (payday loans, medical bills, credit card debt)
- no vehicle loan
- no mortgage, or you do not want to keep the house
- no tax debt
- little or no income or assets
A Chapter 7 bankruptcy stays on the person’s credit report for 10 years. People must wait eight years before they can file again.
Chapter 13 bankruptcy
This option may be more appropriate to people who have regular income. A Chapter 13 filing immediately “stays” or stops any creditor action such as garnishment, foreclosure, repossession, seizure and attempts at collection including phone calls and letters.
The person files a payment plan with the bankruptcy trustee and agrees to pay all future debts on time while an affordable monthly payment plan allows them to pay back their creditors partially or in full over a three to five-year period. In return, the debtor can keep their property (home, vehicle and other assets) so long as the plan payments are made.
Chapter 13 may be the best solution for you if you:
- have income and assets you want to keep
- are behind on your mortgage and want to keep the home
- have received a wage garnishment
- are behind on your car payment or want to get back a repossessed vehicle
- are behind on federal or state taxes (penalties and interest will stop at filing bankruptcy, but everything up to that point is payable)
A Chapter 13 bankruptcy remains on the person’s credit report for seven years.
