The number of bankruptcies in America is rising, along with the falling economic situation. In 2007, Virginia was in the middle of the number of bankruptcies per capita in each state. The laws governing the processes of bankruptcy were originally created by the federal government, but each state has made their own amendments and, or additions to these laws. In addition to these state variances, there are a multitude of bankruptcy options when it becomes the only option for an individual or business in a financial crisis.
Finding a Bankruptcy Attorney
Finding a specialized bankruptcy attorney is vital to the process as a whole, because of the complexities involved with choosing the right form of bankruptcy. Finding the right attorney can be simple with online services, however to find the best attorneys, personal or business referrals are the best. These attorneys will effectively assess a debtor’s in order to navigate this choice. However, generally, Chapter 7, Chapter 11 and Chapter 13 bankruptcy are used in the majority of cases.
Bankruptcy Options
After finding one’s desired bankruptcy attorney, a consultation will take place to determine the most beneficial option. Of the following, Chapter 7 is the most common:
- Chapter 7, the method in which all a debtor’s assets are liquidated, aside from exemptions, in order to repay creditors. This leaves a debtor free of most debts, but also without most of their possessions. It is commonly called liquidation bankruptcy.
- Chapter 13, a method designed for debtors with continuing income, but also with a large build of debt to be repaid. A plan is 3 to 5 year plan is created, and this process is generally called rehabilitation bankruptcy.
- Chapter 11, a method very similar to Chapter 13, but is designed for use by businesses, rather than individuals. It allows businesses to continue their functionality and production while going through the bankruptcy process.
Virginia Exemptions
Virginia law allows for the uncommon, but not unique allowed combination of state and federal exemptions when filing Chapter 7 bankruptcy. Generally, the following will be exempt:
| Homestead | up to $5,000 or sale up to $5,000, plus $500 per dependent |
| Wages | up to 75% earned but unpaid |
| Personal Property | Kitchen appliances, family heirlooms to $500 |
| Pensions | No limit |
| Public Benefits | Crime victims, worker’s, unemployment and ERISA-qualified up to $17,5000 |
| Tools of the Trade | up to $10,000, farming tools up to $3,000, other up to $1,000 |
| Insurance | Full group/cooperative insurance |
| Miscellaneous | Burial plots, health aids, bible, furnishings to $5,000, pets, wedding rings, child support and alimony, and $2,000 for disabled veteran householders. |
Filing the Petition
After completing the preliminary stages of bankruptcy with a legal professional, and choosing the most effective method to use, a bankruptcy petition must be filed to the bankruptcy court. To file the petition, an inventory of all a debtor’s possessions must be taken. This procedure should be taken very seriously for those filing Chapter 7 bankruptcy in order to avoid possibly bankruptcy fraud. If after 20 to 40 days the petition is granted, all creditors will be notified, and a meeting will be arranged. This is the “341 meeting,” which is extremely important for those filing Chapter 13 bankruptcy, because it is when the repayment plan is designed.
