Virginia Bankruptcy Process
Bankruptcy is not for every situation or for everyone. Because
bankruptcy is a process that is so often abused, it should be used with
caution. Bankruptcy is not designed to eliminate the outstanding debt
for those with means to do it themselves. In fact bankruptcy is not
able to eliminate debts to secured creditors, discharge the debts of
special treatments, or protect those who have cosigned loans.
Secured credit means loans made from collateral. Special treatments
include divorce-related debts, alimony, child support, student loans,
criminal fines, court restitution, and some taxes. Bankruptcy is unable
to affect cosigners. Those who cosign loans are not relieved from their
responsibilities and are still required to pay of their portion of the
Bankruptcy is appropriate for those who have experienced sudden
financial difficulty. These usually include a recent divorce, the loss
of employment, an illness resulting in an extended stay in the
hospital, or the loss of a major client.
In recent years bankruptcy has been used as an "easy-out" for some
consumers. To decrease this abuse of the bankruptcy system, the
government installed new acts of prevention. The 2005 Bankruptcy Act
placed new regulations on who is allowed to apply for Chapter Seven
bankruptcy and set new increases on Chapter Thirteen bankruptcy
Now each month will have higher minimum payments to speed up the
bankruptcy process. New prevention acts were also installed to decrease
the access to all bankruptcy courts, including Virginia bankruptcy
To eliminate abusers, Virginia requires each bankruptcy petitioner to
complete a means test. This means test will calculate an individual's
income, debts, and expenses and then compare them to the median of all
other residents in the state of Virginia.
Those that come below the median or are equal to the median are often
eligible for Chapter Seven bankruptcy. Those who come above the median
are often eligible for Chapter Thirteen bankruptcy.
Different Types of Bankruptcy
Virginia offers four different types of bankruptcy for its citizens.
Chapter Seven bankruptcy is called liquidation or straight bankruptcy.
This form of bankruptcy is for consumers with heavy debts. Chapter
Seven bankruptcy used liquidated access and properties to pay off
The court assigns a trustee to handle the liquidation process of
non-exempt properties. This process can take up to six months. In the
meantime all creditor calls and foreclosures will be frozen.
Chapter Eleven bankruptcy is called reorganization as it allows
businesses to eliminate large amounts of debt. Chapter Twelve
bankruptcy is for family-owned farms to relieve financial strain.
Chapter Thirteen bankruptcy is called debt adjustment as it handles
debts through financial adjustments.
Chapter Thirteen bankruptcy eliminates debts through a court organized
repayment plan. The court will evaluate an individual's finances,
income, expenses, debts, and dependents before calculating how much is
required to be paid monthly to eliminate debt within five years.
The state of Virginia allows individuals to file for Chapter Thirteen
again anytime when needed. However individuals are required to wait a
minimum of six years before they can again file for Chapter Seven