This page is intended to provide general information for persons considering filing for bankruptcy. It is important to note that every situation is different and these questions and answers are not intended as a substitute for a consultation with competent counsel. If you would like to schedule an appointment, you may click here for our contact information.
1. I am considering filing for bankruptcy. What are my options?
There are three general forms of bankruptcy filing available to individual debtors. These are Chapter 7, 13 and in some cases 11. However, before filing for bankruptcy, it is important that you evaluate your present financial situation to determine whether filing is necessary. In some cases you may be able to work out alternate payment arrangements with your creditors, such as extending payment periods, deferring payments, or offering a lump sum amount to satisfy and outstanding debt. It is a good idea to seek counsel from a bankruptcy attorney to determine how and what steps you should take prior to filing for bankruptcy.
2. If I file for Chapter 7, liquidation, does this mean that all of my property will be sold? Can I keep anything?
Chapter 34 of the Code of Virginia allows for certain property to be exempt from the bankruptcy estate. The family dog, some retirement plans, and a certain level of property is eligible under the exemption. What this means is that you as the debtor are allowed to select assets that you will keep and which will not be used to satisfy the claims of your unsecured creditors.
3. What are the different types of creditors?
In general there are three different types of creditors. First, are secured creditors. These are creditors to whom an individual owes a debt such as a loan and the loan is attached to an asset of the individual. For example, the person holding the mortgage on your house is a secured creditor. Another secured creditor is the creditor who holds a debtor's car loan.
The second type of creditor is an unsecured creditor. These are creditors such as credit card companies. The debt is linked to a specific asset.
The third type of creditor is a priority creditor. The person to whom an individual owes a child support obligation, the bankruptcy attorney, the trustee, and the IRS all are considered priority creditors.
4. What fees will I be required to pay and how will I pay them?
There are several fees that must be paid. First is the filing fee. This fee is paid directly to the bankruptcy court. Currently, the filing fee for a Chapter 7 bankruptcy is $299.00. The filing fee for a Chapter 13 bankruptcy is $274.00. Click here to go to the Eastern District of Virginia Bankruptcy Court Fee Schedule.
In addition to the filing fee, you will have to pay a fee to your attorney and to the trustee. Some attorneys will allow their fee to be paid in installments. The trustee is a priority creditor and his fee will be accounted for in your bankruptcy. In some cases, the attorney will also allow his fee to be accounted for within the bankruptcy, as the attorney is also a priority creditor.
5. My house is about to go into foreclosure. Will filing for bankruptcy protect me from losing my house?
Filing for bankruptcy will temporarily prevent a foreclosure from taking place. It will also provide you with more time in which to explore your options of (1) selling (assuming you have equity in the house), (2) renegotiating the loan in some cases, (3) giving you time to bring current any arrearage that exists.
6. How will filing for bankruptcy affect my credit?
Filing for bankruptcy will have a negative affect on your credit score. This effect is not permanent. In general, a filing will remain on your credit report for ten years. You will be able to rebuild your credit immediately upon receiving a discharge. If you take the proper steps to rebuild your credit, it is possible to qualify for a mortgage loan in as little as three years.
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