Many Virginia residents feel they are stuck in debt and wonder if bankruptcy is the best solution to their problems. While bankruptcy is a something to consider, there are other options to think about before filing for bankruptcy.
The first step a person considering bankruptcy should take is to look at their budget. Many people find that once they write down everything they spend, there is plenty of room to cut out expenditures on unnecessary items.
After creating a budget, one should next consider how long it will take to pay off their debt, along with how much interest and fees will accrue during that time period. It could be possible to pay off the debt after budgeting, but if it will take many years, then it may be beneficial to file bankruptcy.
After deciding to file bankruptcy, the next step is to determine what type of bankruptcy should be filed. A Chapter 7 bankruptcy allows the debtor to discharge their unsecured debt in exchange for exposing their assets to examination by a bankruptcy trustee, and in a Chapter 13 bankruptcy, additional interest will not accumulate as the debtor makes payments to his or her creditors for three to five years. The type of bankruptcy a debtor should choose is typically based on income. If a debtor has a lot of assets, selecting a Chapter 13 bankruptcy may allow them to keep more of those assets.
An attorney may be able to help debtors decide whether or not bankruptcy is right for them. Bankruptcy laws are based on both state and federal statutes and can change from year to year. Therefore, it is a good idea to have a bankruptcy lawyer’s assistance when filing for bankruptcy as mistakes in the bankruptcy petition can be costly and can even get the debtor in legal trouble.