Virginia residents who have more debt than they can afford to pay back may decide to file for bankruptcy under Chapter 13. During the bankruptcy process, debtors will be asked to report all of their income and assets that could be used to pay off outstanding debts. Many people will have income from Social Security Disability benefits, but this income does not always have to be reported.
A Virginia resident who has filed for Chapter 13 bankruptcy must set up a payment plan with creditors. That payment plan lasts for three to five years and is administered by a trustee that the court has appointed. The debtor sends the money to the trustee and the trustee pays the creditors. For debts like unsecured loans, the trustee probably makes a monthly distribution. In cases like these, if the debtor is a week late paying the trustee, it may not matter and might even go unnoticed.
In 2012, there were about 16 million homeowners facing foreclosure compared to just 6 million at the start of 2015 according to Zillow. However, as many as 20 percent of homes in cities such as Chicago or Las Vegas are underwater even as home values rise. This means that something as simple as a job loss or rising interest rates could trigger foreclosures for many Virginia families moving forward.
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.
People who are working but who are unable to meet their monthly financial obligations may qualify for relief by filing for Chapter 13 bankruptcy. The procedure is meant to assist wage earners with a legal solution that is designed to help them repay part or all of their debt by creating a payment plan for the debtor that is affordable and feasible.
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.