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Different approaches to debt

People in Virginia who are struggling with debt may wonder whether bankruptcy is the right solution. There are several things people should consider before they file for bankruptcy. By making a written budget, people often discover they have more room to pay off debts than they realized.

However, if people find that there is little room in their budget or that it is going to take them a very long time to pay off debt, they may want to consider filing for bankruptcy. Most likely, they will file for either Chapter 7 or Chapter 13 bankruptcy. In the former type of bankruptcy, the filer's non-exempt assets are liquidated with the proceeds being used to pay creditors. Chapter 7 bankruptcy has a means test and other eligibility requirements.

In a Chapter 13 bankruptcy, people are able to reorganize their debts over a period of three to five years pursuant to a court-approved plan. They have to show that they can pay their monthly expenses as well as the restructured obligations.

Bankruptcy law is complicated, and while do-it-yourself bankruptcy is possible, people may wish to work with an attorney at the outset of the process. A small error in filing can delay the filing or make it invalid. An attorney may also be able to discuss the different bankruptcy options and suggest which might be best for the person filing. Many people find themselves having to file for bankruptcy not because they are irresponsible but because of medical bills, unemployment, divorce or for other unavoidable reasons, and it is often possible to begin rebuilding credit shortly after bankruptcy.

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Bowen Ten Cardani, PC

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