You’ve been working hard and doing your best, but you just can’t quite seem to keep up with the bills that arrive every month. Even with a steady stream of income, you may be falling more and more behind. It may seem like your efforts are futile, and you aren’t sure what to do to change your life. You do have options, though, that can free you from debt and help you start over.
Regardless of what you may have heard, Chapter 13 bankruptcy can be an effective and powerful tool. Not a destructive end-all, bankruptcy can help you manage your debt, maintain your assets, and take control of your financial life.
For those facing financial hardship in Virginia, the experienced attorneys at Chesterfield Bankruptcy Law are here to help. For over 20 years, our legal team has been dedicated to helping clients achieve financial freedom through bankruptcy. We have the knowledge and tools to help you use this legal option to meet your goals and restart your life. Even if you aren’t sure if bankruptcy can improve your situation or if you would even qualify, don’t hesitate to reach out to us. Contact us today to speak directly with our team. We can answer your questions and help you decide the best path forward.
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is one of the many bankruptcy tools available to individuals facing significant debt. A Chapter 13 bankruptcy is sometimes known as a wage earner’s plan or reorganization bankruptcy. In this type of bankruptcy, debt is reorganized, and individuals pay back all or some of their debt over the course of three to five years. Debt not paid by bankruptcy can be discharged (or erased) at the end of the process. This allows individuals to retain possession of their assets while still addressing their troublesome debt.
The payment plan is the major component of a Chapter 13 bankruptcy. There is no one plan for all Chapter 13 bankruptcies; each individual is unique, and payment plans will be tailored to one’s specific income and debt.
How the Repayment Plan Works
A Chapter 13 bankruptcy plan can be developed with the help of an experienced and knowledgeable attorney. They can help you assess your debt and understand your obligations to pay. Once you form a plan that will satisfy your debts and meet your individual needs, it will be reviewed by a trustee appointed to your case. This trustee will approve your plan, arrange a meeting of creditors, and then carry out the plan on a continuing basis.
A payment plan must address all your debt. Some debts must be paid in full to satisfy the terms of the bankruptcy code. Other forms of debt can be paid in full, or some of the balance can be discharged at the end of the bankruptcy. Typically, a payment plan will address:
- All mortgage debt. If you want to keep your house, you must pay your mortgage debt. Failure to make payments could result in the loss of the property.
- All priority debt. Priority debt includes child and spousal support, certain types of taxes, money owed to employees, and more.
- All secured debts (if you want to retain the property). Secured debt is money owed that is tied to collateral and can be repossessed if you default. Vehicles are a common type of secured debt.
- At least some portion of unsecured debt. Unsecured debt is money owed that does not have a specific property associated with it, including student loans, credit cards, medical bills, and more. It is possible that all of your unsecured debt will be paid. It is also possible that some of this debt will be discharged. The specific details of your situation will determine what is appropriate.
Advantages of a Chapter 13 Bankruptcy in Virginia
While a Chapter 13 bankruptcy does not simply discharge debt as in other types of bankruptcy, it does have some other specific advantages, including:
- Rescheduling secure debts. This means that individuals can lower payments by reorganizing debt and spreading the payments out over a longer period of time.
- Halting foreclosure. It is possible to keep your home and stop the foreclosure process, regardless of the amount of equity in the home.
- Protecting co-signers. In other types of bankruptcy, a co-signer is still responsible for the debt. A Chapter 13 filing can protect third parties with respect to consumer debts.
- Effectively consolidating payments. Debtors pay a trustee every month, who then distributes the payments to the appropriate creditors.
- Improving credit faster. A Chapter 13 bankruptcy appears on a credit report for seven years, which is a shorter amount of time than for other types of bankruptcy.
How Our Chesterfield Chapter 13 Bankruptcy Attorneys Can Help
Filing for Chapter 13 bankruptcy can be an effective way to get out of debt, but it can also be a time-consuming and complex process. While it can be tempting to try to go it alone to save money, an experienced bankruptcy attorney can ensure that the process is as successful and efficient as possible. Bankruptcy attorneys are familiar with state and federal laws, as well as Chapter 13 procedures. Additionally, a knowledgeable attorney can ensure the timely execution of:
- Document filing
- Payment plan formation and filing
- Notification of creditors
- Appearance at hearings
- Continuing compliance with the terms of the bankruptcy agreement
Self-represented Chapter 13 bankruptcies are typically complicated to execute. If you are considering using this legal tool, you are likely already under considerable stress. You want to be sure you are taking the right steps to be successful and prevent additional problems in the future.
If you or someone you love is struggling to manage your debt, you need help from an experienced and compassionate bankruptcy attorney. Contact the legal team at Chesterfield Bankruptcy law today to learn more about bankruptcy in Virginia and your options.