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 Chapter 7 bankruptcy is often referred to as the “fresh start.” The concept of Bankruptcy dates back thousands of years, there are even references to canceling debt in the Old Testament of the Bible. Even when the founding fathers were forming our Nation and drafting the Constitution, they were considering the importance of bankruptcy laws. The United States Constitution gives Congress the power to establish laws regarding bankruptcy. Today, millions of Americans have filed for bankruptcy and there is no indication that the trend will change. The vast majority of all of the people we meet with qualify to file a chapter 7 bankruptcy and wipe out all of their debt.
In October 2005 Congress passed the largest Bankruptcy Reform Act in decades, also referred to as BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005). Essentially, what happened was the largest credit card companies in the world got together, drafted the bankruptcy law that they wanted and paid Congress millions of dollars to pass their new law. BAPCPA made several major changes to the Bankruptcy Code. Some of the major changes are as follows:
- Debtors must take two credit counseling classes in order to be eligible for a bankruptcy discharge. Generally, the first class is approximately 90 minutes long and the second class is 2 hours long. The classes normally range in price from $35.00 to $50.00 per session and are available in person, on the internet or via telephone.
- Debtor’s must qualify for bankruptcy by making less than a certain amount of money per year. Congress established a “Means Test” to determine if a debtor had the means to pay back his or her debt. Basically, if a debtor’s household earns LESS than the State median income for a household of the same size, then the debtor may qualify for a chapter 7 bankruptcy. If the debtor’s household earns over the state median income, then he/she will not qualify to file a chapter 7 bankruptcy unless he passes the “means test.” The means test is worksheet that takes into consideration IRS standard guidelines for household expenditures for things like housing, food, clothing, automobile expenses, child care, taxes, health insurance, medical costs, retirement savings, and other things, to determine if you are eligible for a chapter 7 bankruptcy.
- The debtor’s right to keep secured collateral by merely retaining said collateral and continuing to make payments was limited by the new bankruptcy law. Under the New bankruptcy law, if the debtor does not sign a reaffirmation agreement, then the automatic stay is automatically terminated 45 days after filing the petition. This means that the creditor may exercise it’s state court rights against the collateral without having to have an order entered by the bankruptcy court granting a relief from stay.
- The time limit between the filing of a chapter 7 bankruptcy was lengthened from six years to eight years. The automatic stay, that’s the Court order that stops collection activity against the debtor, automatically terminates 30 days after filing the petition if there has been a case dismissed in the last one year.
There are many other important changes BAPCPA made to the bankruptcy Code, and one of our attorneys would be happy to sit down and discuss them with you if you want more information. Our team of experienced bankruptcy attorneys have represented hundreds of debtors’ in bankruptcy since the laws have changed.
The Chapter 7 Bankruptcy can discharge or eliminate all types of consumer debts, including, but not limited to, pay-day loans, medical bills, credit cards, bank loans, credit union loans, gas cards, store cards, cell phone bills, gym memberships, timeshares, back rent & utilities, judgments, auto loans, signature loans, furniture loans, and more.
The Chapter 7 Bankruptcy may not be able to eliminate some tax debts, court fines, fines associated with DUI, debts incurred by fraud, and debt incurred for education, like student loans.
Most people are able to keep their assets in a Chapter 7 Bankruptcy. Each state has laws that establish “exemptions.” These exemptions list items that a debtor is allowed to keep in bankruptcy. Some examples of protected assets and exemptions in Virginia would be: family bible; family pet; wedding rings; $5,000.00 worth of household goods, like furniture; $2,000.00 equity in an automobile; $1,000.00 worth of clothing; $5,000.00 equity in a home/ or other items the debtor chooses; tools of the trade, like mechanics tools; 401K; and IRA. For the complete list of items a debtor is permitted to keep in bankruptcy please call one of our experienced attorneys for a consultation.
When you file a chapter 7 bankruptcy your attorney will need certain documents from you in order to prepare your case. Some of the documents that the court requires are tax returns, pay stubs, copies of bills, credit report, and documents regarding secured debts such as houses and automobiles.
Our attorneys have filed thousands of bankruptcies in the eastern district of Virginia. Please call to schedule an appointment with one of our experienced bankruptcy attorneys to find out if bankruptcy is the right option for you.
Virginia Chapter 7 Bankruptcy Attorneys
Bankruptcy Lawyers for Hampton, Newport News, Virginia Beach,
Norfolk, Chesapeake, Williamsburg, Suffolk, Smithfield and all of Hampton Roads |
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