We’ve all heard of bankruptcy before and maybe you’re considering filing soon. But do you know how to file in the first place? Bankruptcy law isn’t common knowledge, and the process can be confusing. We’ve put together a guide on filing for bankruptcy in Virginia to assist you during this time.
The Means Test
The means test is used to determine if you are eligible to file for Chapter 7 bankruptcy. Under this test, the court analyzes your income for the 6 months prior to your filing. compared to the median income in the state of Virginia. If your income is determined to be under the median income, you are eligible for Chapter 7. In the case that your income is above the median income, the courts will take a look at your expenses and debt to see if you still qualify. If not, you may file for Chapter 13.
Chapter 7 and Chapter 13
Chapter 7 and Chapter 13 bankruptcy are some of the most common forms of personal bankruptcy. Chapter 7 bankruptcy is seen as a form of liquidation as it allows for the quick discharge of personal debts. Sometimes referred to as “straight bankruptcy,” Chapter 7 bankruptcy does not discharge all debts, but may delay foreclosure proceedings.
Chapter 13 bankruptcy requires individuals to follow a payment plan as a means to pay back some of the debt owed to creditors. This plan may last from 3 to 5 years. People who file for Chapter 13 bankruptcy receive credit counseling, debtor educator and may be able to retain property rights.
Preparing to File for Bankruptcy
Preparing to file for bankruptcy does require a fair amount of paperwork. Take time to organize all of your financial information including:
- Your income (include all sources)
- Debts (both secured and unsecured)
- Tax returns for the last 2 years
- Financial transactions for the last 2 years
- Titles, deeds, and loan documents
You may be able to protect some property from seizure. Work with an experienced bankruptcy attorney to determine if you meet any of the exemptions. Property that does not meet exemptions will be legal controlled by the courts during your bankruptcy proceedings.
Fees, Automatic Stays, and Trustees
You may file for bankruptcy yourself, or your attorney may file on your behalf. The current cost of filing Chapter 13 bankruptcy is $310. Chapter 7 bankruptcy filing costs $335. Neither fees can be waived.
After you file for bankruptcy, an automatic stay is issued, which protects you from creditors. They may not make claims on your property, continue a foreclosure proceeding or contact you in any way. A trustee will be appointed by the courts to analyze your reports and make sure creditors receive any many payments as possible.
Choosing the Right Bankruptcy Lawyer
Of course, one of the most important decisions you make after deciding to file for bankruptcy is who will serve as your bankruptcy lawyer. Bankruptcy law is a complicated matter and not something well known by the average person or even the average lawyer.
Look for a lawyer who has plenty of experience in bankruptcy cases with examples to prove it. Ask for more information, references, and their specialties during your consultations with law firms. Follow up with those references, and seek referrals from trusted family members. You can look to your local State Bar Association for a list of practicing bankruptcy lawyers in your area.
Always look for a lawyer who is open and forthcoming during the consultation. You’ll spend plenty of time working with your bankruptcy attorney. Having open lines of communication is invaluable.
At Tyler, Bartl & Ramsdell, P.L.C., we have over 25 years of experience assisting clients like you with bankruptcy. Call (703) 549-5001 to schedule a free consultation.