Today, it is not uncommon for individuals to face financial difficulties and become overwhelmed with debt. When it gets to the point where monthly bills go unpaid and creditors are constantly calling, it may be time to consider filing for bankruptcy. One common myth is that this is a personal failure; however, bankruptcy is designed to help you achieve three essential objectives: reorganize your finances, protect your assets, and make a fresh start.
Located in Vienna, Alavi Law, PLLC provides comprehensive debt relief services to clients throughout the Commonwealth of Virginia. We are well versed in the applicable provisions of the U.S. Bankruptcy Code and are highly regarded for helping our clients successfully navigate Chapter 7 and Chapter 13 debtor filings. Our team takes great satisfaction in protecting financially pressed individuals from high-interest credit companies and predatory lenders. We also take a long view by providing our clients with customized guidance on repairing their credit, avoiding the pitfalls of excessive debt, and reorganizing their financial future.
Is bankruptcy right for my situation?
By understanding your circumstances and exploring all your options, we will advise you on whether bankruptcy is a viable option and which form best suits your situation.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is referred to as a liquidation bankruptcy because it eliminates most of your unsecured debt. This may involve selling some of your property and assets, however, to pay off as much debt as possible. The balance of the remaining debt is then eliminated or discharged. Certain types of property, residential real estate and automobiles or personal property like furniture and clothing, however, are exempt from being sold.
More importantly, a court order known as an automatic stay goes into effect once the bankruptcy petition is filed. The order stops all collection activities, including garnishments, repossessions, foreclosures and lawsuits, which cannot be restarted without the bankruptcy court’s permission. The order remains in effect until the bankruptcy is dismissed or discharged. This gives you the opportunity to catch up on your delinquent monthly mortgage payments and save your home if possible.
To be eligible for protection under Chapter 7, your income must be lower than the median income in the Commonwealth of Virginia. If you earn more than the median, it is necessary to pass what is known as a “means test” to prove that you do not have enough disposable income to make the payments. If you do not pass the means test, the bankruptcy will either be dismissed or the case will be converted into a Chapter 13 bankruptcy.
Finally, before you are allowed to file for Chapter 7 protection, you must attend credit counseling with an agency approved by a bankruptcy trustee. This course is designed to counsel you on managing your finances and using debt responsibly. If you are considering filing for Chapter 7 bankruptcy, Alavi Law, PLLC will provide you with superior legal representation.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, or a reorganization bankruptcy, involves establishing a repayment plan to pay off debts with future income while retaining your property. This form of bankruptcy is only available to individuals and married couples — businesses are not eligible. To initiate the process, a bankruptcy petition must be filed with the court, which includes a proposed 36-to-60 month repayment plan.
As with a Chapter 7 filing, you must pass a means test to qualify for Chapter 13, and also pay a filing fee. After the bankruptcy court approves the repayment plan, you then make monthly payments to the bankruptcy trustee, who distributes payments to your creditors. In order for the bankruptcy to be discharged, all required plan payments must be completed. If you fail to adhere to the repayment plan, the case will be dismissed and creditors will be permitted to resume collection activities.
A Chapter 13 filing also involves an automatic stay which stops all collection activities, including a foreclosure — the mortgage loan can be incorporated into the repayment plan. Generally, the plan allows you to catch up on delinquent mortgage payments, provided that monthly payments continue to be made. In addition, the balance of a delinquent auto loan can be paid off over a 3 to 5 year time period. Finally, tax debts can be repaid through the repayment plan while certain tax debt — for a collection period that is at least 3 years old — may be eliminated.
How Our Vienna Bankruptcy Attorney Can Help You Make a Fresh Start
We are keenly aware that filing for bankruptcy protection is a serious consideration as well as a difficult journey and an emotional burden. Our team of debt relief attorneys is here to lift that burden by designing a plan to reorganize your finances and charting a course for the future that puts your mind at ease. If you are facing insurmountable debt, you may be afraid and not know where to turn. Get in touch with our office today or complete the contact form on our website to set up a consultation. Your financial relief starts at Alavi Law.