Virginia Chapter 7 Bankruptcy

Among the key highlights of bankruptcy under Chapter 7 is the partial protection it provides for the person that files for it. There are certain assets that are exempted from liquidation to pay creditors and are generally assets that are linked to one’s day to day living for such as household goods. Under the BAPCPA 2005 (Bankruptcy Abuse Prevention and Consumer Protection Act), a debtor is provided with additional time to choose if they want to go for the state or federal lists for exempt property – the reason for this is to prevent a debtor from relocating to another state in an effort to enjoy what they would consider asset exemptions that are more generous than those of their home state.

Not everyone automatically qualifies for Chapter 7 bankruptcy and a debtor who wishes to lodge a petition under BAPCPA must be “means tested” to qualify. Income and expenditure are critically assessed to determine how well they fare as far as the standards defined by the Internal Revenue Service (IRS) for a particular area. The forms to file the petition can be obtained from a stationery store or an attorney’s office. An attorney is best placed to assist you in preparing the forms. Please note that the forms cannot be obtained directly from the courts. Overall, the cost of filing the petition is likely to be in the region of $300.00.

Once an individual case is filed, a Trustee whose role is to oversee the disposal of assets is then appointed. It is their job to sell the applicable assets and thereafter use the proceeds to pay creditors accordingly. Creditors cannot begin or continue any lawsuits, garnishee orders, letters, telephone calls or any other demands for payment from the debtor. A debtor may voluntarily pay a creditor although it is always advisable to seek legal advice before doing so. A meeting of creditors is held 20-40 days following the filing of the petition. This meeting is known as a 341 meeting. The debtor must attend this meeting and answer questions relating to their financial affairs and property.

Creditors have 60 days from the date of the 341 meeting to convince the court that they should be paid and show reason why the debt must not be discharged. Another alternative for debtors is the reaffirmation of debts. This is an agreement where the creditor and debtor agree that the remaining portion of a debt is paid in order to keep certain property e.g. an automobile.

In order to reaffirm a debt, an agreement between the parties must be filed with the court.

The agreement must disclose the following:
    · A debtor’s income and expenditure – this is in order to show that there are sufficient funds to settle the       reaffirmed debt.
    · The debtor was advised of the amount of debt being reaffirmed
    · How the debt was calculated
    · The debtor’s awareness that the reaffirmed debt will not be discharged

In the absence of an attorney, the agreement must be approved with the court and if the court does not approve, a hearing will held. Where represented by an attorney, they must certify, in writing, that they advised the debtor of the legal consequences of the agreement, that the debtor entered into the agreement voluntarily and that the reaffirmation will not cause hardship to the debtor or their family.

A debtor who meets Chapter 7 requirements will be permitted to discharge the debt, regardless of the assets held (in value terms) or the amount that creditors eventually receive. In a nutshell, it gives the debtor the opportunity to start over debt free. The laws relating to discharge are complex.Vienna Law Group are experts in the field of Chapter 7 Bankruptcy proceedings and will be more than happy to assist any person in Virginia state that would like to go through this process. You are advised to contact them before commencing any such action in order to better your chances of successfully filing for Chapter 7.