July 26, 2019

If you’re experiencing financial burdens and are desperate for a solution that will help you get control over your debt, you’re not alone. Statistics from the American Bankruptcy Institute reveal that almost 12,000 people have filed for personal bankruptcy in Virginia so far in 2019. For many, bankruptcy is a viable option for moving on and getting a fresh start, as long as it’s done properly.   

Unfortunately, many people make critical mistakes with the bankruptcy process if they don’t have a legal background. A Virginia bankruptcy attorney can help you steer clear of these issues, and the cost is probably more reasonable than you think – especially when compared to the consequences of errors and omissions. Some of the top mistakes you can avoid with the help of a bankruptcy lawyer include: 

  1. Filing Under the Wrong Chapter: There are two forms of bankruptcy for individuals, and the path that’s right for you will depend on your circumstances and goals. Chapter 7 is a discharge of all debts and, though some cannot be eliminated entirely, you can emerge from the process without owing on others. This proceeding does have drawbacks, especially with respect to your credit score going forward. Chapter 13 is a debt restructuring plan, where you’ll keep making payments on your debts – but under an arrangement that you can afford. 

Each approach to bankruptcy features pros and cons, with respect to your assets, your situation during the process, and your future after it concludes. One of the biggest mistakes you can make with bankruptcy is choosing the wrong chapter for filing.  

  1. Waiting to Set Up Credit Counseling: You’ll need to consult with a bankruptcy court-approved credit counseling agency within 180 days before filing your petition under Chapter 7 or Chapter 13 of the US Bankruptcy Code. Since it’s a requirement, there’s no reason to delay setting up the consultation.
  1. Paying Off Debt with Savings or Retirement Accounts: Spending down your savings to pay off creditors may not be the best move, as you may be able to protect these assets in bankruptcy proceedings. Otherwise, you could be applying these amounts to late fees and interest – without even touching the past due balance. The exception might be where you could pay off your entire debt, or almost all of it, by clearing out your savings. Retirement accounts are different, especially an IRA or 401(k). By taking early distributions, you could incur are tax implications and penalties. Worse, you’ll have less for retirement later.

Schedule a Consultation with a Virginia Bankruptcy Lawyer Today

The most effective way to avoid bankruptcy mistakes is to work with a knowledgeable attorney throughout the process. For more information on our bankruptcy services, please contact Cravens & Noll PC or fill out our consultation form. We can meet with you at our offices in Richmond, Chesterfield, Henrico, or Harrisonburg. Our team has helped countless individuals in Central and Western Virginia get out of debt, and we look forward to helping you with your rights and your future. 


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