What Type Of Bankruptcy Are You Eligible For?

Virginia bankruptcy falls under the Bankruptcy Act of 2005. If you need to file for bankruptcy, consider talking to a bankruptcy attorney in Alexandria, VA. This is one way you can receive legal advice on what type of bankruptcy you may qualify for. A qualified lawyer can provide you with information on your options. He or she is also cognizant on the bankruptcy laws as they pertain to Virginia, including exemptions and the applied Means Test.

Consumer Bankruptcies

Essentially, consumers are given a choice between 2 types of bankruptcies: Chapter 7 and Chapter 13. Each type is a means through which an individual can get out from under an onerous debt load. To clarify the difference between each type, talk to a bankruptcy attorney in Alexandria, VA.

  • Chapter 7: In return for surrendering all non-exempt property and assets, an individual can eliminate a significant amount of unsecured debts. This can take several months. This type of bankruptcy results in complete debt forgiveness. A discharge will prevent any creditors legally pursuing the matter further.
  • Chapter 13: This form of bankruptcy takes longer. It may take as long as 5 years to complete. The debtor does not surrender any property for sale, instead, he or she create a strict financial plan (basically a budget). The budget contains a very specific payment plan. This indicates how much and for how long the debtor will pay the accumulated and now consolidated and/or substantially reduced debts. The trustee, appointed by the courts, will monitor the adherence to the plan closely. Failure to meet the payments regularly and on time results in a failure of Chapter 13 bankruptcy.

Concerning Eligibility

The Means Test put into place since the Bankruptcy Act of 2005 became law is applicable to both types of bankruptcy. This mathematical formula, based on a state median income as compared to the debtor’s income, is employed to determine who the state feels is best qualified for one or the other types of bankruptcy. Essentially, those applicants who fall below the Virginia state median are eligible for Chapter 7; those above it are not but may qualify for Chapter 13.

For those whose income places them into the Chapter 13 category, all is not lost. They may yet be eligible for Chapter 7. The state will determine this by requesting the debtor fill in information regarding expense deductions. This is used to project the debtor’s “disposable income” for the next 5-year period. It is this which will ultimately place the debtor within the Chapter 7 or 13 category of bankruptcy. An attorney in Alexandria, VA can help you whichever way the decision goes.

Whether you want to file a Chapter 7 or Chapter 13 bankruptcy, an attorney in Alexandria, VA is your best option. A bankruptcy lawyer has experience and expertise in all aspects of Virginia bankruptcy law. He or she can guide you through this intricate process from start to completion.

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