People in Virginia considering bankruptcy could benefit their situation by learning about some of the basics for the process. Bankruptcy laws are also meant to ensure that debtors are not abused or deceived by creditors seeking repayment. Additionally, filing for bankruptcy is supposed to give individuals relief from overwhelming debt, allowing for a fresh start when personal debt becomes too much to handle and an automatic stay to stop creditors from trying to collect.
One of the immediate benefits of filing for bankruptcy is the enactment of an automatic stay, which goes into effect when a person files. This stay will cause the cessation of most, but not all, actions made by creditors to collect debt. Some actions are only suspended for a few weeks. Courts might also allow creditors to continue engaging in some debt-collection activities. Also, creditors might file objections, which could delay the bankruptcy case.
To get an automatic stay, debtors must file the right papers with the court and pay a filing fee. The petition has to set forth information about an individual’s finances, including a list of assets and liabilities. Copies of pay stubs as well as the previous year’s federal tax return should accompany the petition. Individual debtors are required to take a consumer credit counseling course by an approved agency prior to filing for Chapter 7 or Chapter 13.
Although understanding the basics of what goes into beginning a bankruptcy case and getting an automatic stay is useful, many people might benefit from discussing details of their case with an attorney who has experience in bankruptcy laws. The attorney can explain the other eligibility requirements associated with Chapter 7 and Chapter 13.
Source: Virginia State Bar, “The Bankruptcy Process“, October 07, 2014