If you’re considering bankruptcy, one of your biggest fears may be how it will impact your credit score and creditworthiness long term. This is a source of hesitation for many people facing significant debt.
Virginia residents who file for bankruptcy will likely get an automatic stay from creditor activity. Some circuit courts have ruled that the stay is meant to protect the financial and mental health of a debtor. Therefore, if a creditor violates the stay, the debtor could be entitled to collect for emotional stress or anguish. As a general rule, an individual must present clear evidence that a willful stay violation caused such distress.
Virginia residents who are thinking about filing for bankruptcy are generally better off doing so sooner rather than later. By waiting to file, it could result in asset depletion or other problems that make it harder to truly get a fresh start. In some cases, individuals wait months or years before they ask for protection from creditors. By the time they avoid buying food to prevent bankruptcy, they are in what is called the "sweatbox."
Many people in Virginia are struggling with overwhelming debt that seems to be insurmountable. For far too many people, medical debt can be a major reason for their inability to pay their bills and escape financial crisis. Reports show that health care costs for Americans are continuing to increase in 2018 and patients are assuming a larger portion of the cost of their medical care. According to some estimates, 20 percent to a half of the U.S. population are dealing with medical debt. Due to the large costs associated with health care, the amount of this debt can be crushing in many cases.
More than 700,000 Americans filed for bankruptcy in 2017. While the debt-forgiveness process does make it harder to get credit in the short-term, there are ways to get a higher credit score long before the filing drops from a credit report. According to a survey from LendingTree, those who filed for a mortgage three years after a bankruptcy only paid 19 basis points more than people with no bankruptcy.
Virginia residents who are considering undergoing bankruptcy should understand that it is a legal process and that their bankruptcy may not be discharged if they do not follow proper procedure. This is what occurred to a single mother who filed for Chapter 7 and did not disclose that she had $3,500 on hand.
Court protection offers several benefits for Richmond residents seeking debt relief with a Chapter 7 bankruptcy. Certain assets can be sheltered from creditors, and bankruptcy forces creditors to deal with the trustee instead of the debtor. However, it has been reported that two trustees may be jeopardizing debtors' sensitive information by requesting login information for popular websites. With the U.S. Trustee Program withholding support, it is unclear whether electronic snooping is a new trend in personal bankruptcy cases.
A Virginia man who filed for Chapter 7 bankruptcy separately from his wife received a positive ruling from his district's bankruptcy court. The trustee in his case had challenged the fact that he was maintaining two homes while trying to discharge debts. The trustee declared that the debtor should sell one home instead of seeking relief through bankruptcy. The court, however, deemed his expenses to be valid and not an abuse of the Bankruptcy Code.
More Virginia residents might be using a high deductible health insurance plan than they were five years ago based on a study conducted by the National Center for Health Statistics. The study defined "high deductible" as a plan with an average deductible of $1,300 for a single person or $2,600 for family coverage. Between 2011 and 2016, the number of people aged 18 to 64 who were on such a plan rose from 26.3 percent to 39.3 percent.
Virginia residents considering bankruptcy should understand exactly how the legal process works. There are a variety of rules, including a bar against certain transfers of assets within one year of filing a petition.