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A Chapter 7 bankruptcy could be prudent financial planning

Many Virginia residents who file for Chapter 7 bankruptcy only do so after all other efforts to take control of an unmanageable financial situation have failed. Sometimes this is due to the social stigma that surrounds bankruptcy, and sometimes individuals put off seeking a financial fresh start due to fears over negative credit ratings and the difficulties that they will face when they seek to borrow in the future.

Virginia bankruptcy and private student loans

Although it is true that many private student loans cannot be discharged through bankruptcy, Virginia residents may be unaware of exceptions allowing the discharge of such loans either in full or in part under some circumstances. Additionally, some private student loans may simply be beyond the applicable statute of limitations for debt collection, rendering them out of the reach of collection agencies through lawsuits or wage garnishment actions.

Supreme Court debating fate of 2nd mortgages

As many Virginia residents may know, a case before the U.S. Supreme Court focuses on whether a second mortgage holder may be able to hold up negotiations when a debtor is going through bankruptcy. In this case, the appellate court for the 11th Circuit held that the debtor could dispose of a second mortgage in bankruptcy. The holder of the mortgage, Bank of America, objected to that ruling.

The discharge of tax debt through Chapter 7

Individuals who file for Chapter 7 bankruptcy and successfully receive a discharge of their personal debt are often still responsible for any federal taxes that they owe. However, debtors who are unable to pay may seek to have this tax debt discharged as well. Individuals in Virginia who are in this situation may need information about the requirements.

Recovering from filing for bankruptcy in Virginia

If an individual has filed for bankruptcy, they can expect to take a hit on their credit score and have the fact that they have filed noted on their credit report for the next several years. This can make it challenging to obtain credit after filing, but it may be possible if people are willing to deal with higher interest rates and larger potential penalties. In some cases, individuals who have recently filed may be attractive to certain lenders because of how long people have to wait before filing for bankruptcy again.

The status of a business after Chapter 7 bankruptcy

Virginia business owners who are faced with unmanageable debt likely have many areas of concern. One question that they will need answered is whether or not they can keep operations going after the bankruptcy has been filed. The answer to that question largely depends on how the business is organized.

Chapter 7 vs. Chapter 13

Individuals in Virginia who file for bankruptcy generally choose between Chapter 7 and Chapter 13. Chapter 7 involves liquidation of nonexempt assets while Chapter 13 involves making payments to creditors over a period of 3-5 years. In many cases, Chapter 13 payment plans will last five years. Those who file for either type of bankruptcy must partake in a credit counseling class up to 180 days prior to filing.

How discharged debts are treated after bankruptcy

Virginia residents who file for bankruptcy under Chapter 7 may have some of their debts discharged as a result. When a debt is discharged, the creditor can no longer legally enforce repayment of that obligation. Although a person is under no legal obligation to repay a discharged debt, there are some situations where a debtor might decide to voluntarily repay such an amount.

What are the requirements to apply for chapter 7 bankruptcy?

When Virginia residents are struggling with large amounts of debt, they may consider filing for bankruptcy. There are several different forms of bankruptcy, but Chapter 7 is the type most often recommended for individuals who wish to discharge debt. Although this is a popular form of bankruptcy, there are certain eligibility requirements that must be met to begin the process. Understanding these requirements can be helpful when filing for bankruptcy.

Information used in bankruptcy means testing

Virginia individuals facing financial challenges might consider bankruptcy as a way to get a fresh start, but income eligibility for certain types of bankruptcy must be determined first. Known as means testing, this determination is based on the median income for the household size based on national information developed by the United States Census Bureau, the Bureau of Labor Statistics and other agencies. Correct completion of means testing forms is important for ensuring the most appropriate option is used in filing for bankruptcy.

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