Virginia residents may benefit from learning more about which properties are exempt under Chapter 13 bankruptcy. This type of bankruptcy involves reorganizing the debtor’s assets and setting up a repayment plan to reimburse creditors. In contrast, Chapter 7 turns non-exempt assets over to the bankruptcy estate so they may be sold to compensate creditors. Chapter 13 is reserved for debtors who have sufficient means and income, which enable them to actually repay the debt within a predetermined amount of time.
The length of the repayment plans in Chapter 13 bankruptcy ranges in most cases from three to five years. Because the debtor is qualified and committed to repay the debt, there is far less urgency to seize and sell assets in order to offset lenders’ losses. Minus a few exceptions, Chapter 13 bankruptcy typically allows the debtor to retain prized assets, like the family home. Assessing property values is actually essential to establishing the terms of the repayment plan used for Chapter 13 bankruptcy.
The value of the non-exempt properties is assessed to establish the baseline used to calculate how the debtor will repay creditors. Typically, debtors filing for Chapter 13 are required to repay creditors an amount that’s at least equivalent to the value of the non-exempt property they own. These debtors may benefit from understanding more their jurisdiction’s property exemptions, the process for claiming exemptions and which exemptions can be applied to their particular property.
People who are struggling with debt may benefit from contacting a lawyer about filing for bankruptcy. Legal counsel might be prepared to review the debtor’s financials and help provide guidance on the most advantageous strategy moving forward. This form of debt relief might be able to protect debtors from creditor harassment and stop wage garnishments while the bankruptcy process is underway.