From its location in Virginia, the U.S. Court of Appeals for the Fourth Circuit has overturned a lower court decision about stripping liens in Chapter 13 bankruptcy cases. The appeals court ruled that no proofs of claim were necessary to strip a wholly unsecured lien.
While Virginia residents may be enjoying the benefits of a strong economy, that strength could be partially because of increased credit card spending. According to the New York Federal Reserve, household debt was $13.15 trillion in the final quarter of last year. Most of that debt is made up of mortgages, but credit card debt also rose significantly from the third quarter of 2017 to the fourth quarter of 2017.
Bankruptcy might seem like the right solution for some people in Virginia who are struggling with debt. People might file for Chapter 7 or Chapter 13 bankruptcy. A Chapter 7 bankruptcy discharges all allowable debts. A Chapter 13 allows a person to work out a payment plan in which some debts may be paid off. However, there are some types of debt that cannot be discharged, and tax liabilities may be among them.
People in Virginia who have credit card balances or other debts can find out how their debt compares to the state average and the averages across American by taking a look at Experian's State of Credit report for 2017. The report discloses the average debt in every state and the country as a whole. It also breaks the information down into categories, like credit card debt and mortgages and student loans, and includes several other facts and figures.
Far too many people in Virginia struggle with the devastating impact of overwhelming debt that seems impossible to repay. The accumulation of late fees, interest charges and other costs can leave individuals searching for a solution to their financial crises. While bankruptcy can offer hope for the future and an ability to escape from these unpayable debts, many people refrain from filing out of fear of what bankruptcy could mean for their future financial lives and health.
People in Virginia who are carrying a lot of credit card debt are not alone. According to a report by WalletHub, in 2017, credit card debt increased throughout the country by $92.2 billion. A Federal Reserve estimate says the total owed in credit card debt is over $1 trillion.
Student loan debt can be some of the most difficult debt for people in Virginia to deal with; while the numbers can be large, this type of debt is also unique in that it is ineligible for discharge in bankruptcy unlike other loans and debts. However, the chair of the Federal Reserve Board, Jerome Powell, questioned the necessity of this policy during testimony before the Senate Banking Committee in March 2018. Powell said that student loan debt stands alone in its inability to be discharged in bankruptcy and that he had no clear answer as to why this is the case.
People in Virginia who are considering filing for bankruptcy might be wondering whether or not it will affect their ability to purchase or keep a car. In a Chapter 13 bankruptcy, a person's debts are restructured to allow the person to keep some assets and pay creditors over three to five years. A person's car is usually among the assets kept although there are a few exceptions.
When Virginia residents file for Chapter 13 bankruptcy, they may have the ability to modify their mortgages. However, if the lien is a primary lien on a primary residence, the debt is generally fully secured even if the homeowner is underwater on the loan. This is usually not the case if a property is a vacation or investment property. In such a scenario, the property owner could be entitled to a "cram down."
Many people in Virginia who are unable to repay a large debt burden but want to preserve their mortgages, car loans and similar agreements make use of the provisions of Chapter 13 bankruptcy. Under a Chapter 13 bankruptcy, people have the ability to modify mortgages on investment properties and second homes, as well as car loans and similar secured loans for personal or real property, in a process known as a "cram down."