February 2, 2021
Do I Need a Lawyer to File for Bankruptcy in Virginia?
For many, bankruptcy can seem like their last option to save them from mounting debt. If you decide to begin the process of filing for bankruptcy, you may not want to spend money or just want to try to save money. Therefore, you might consider not hiring a bankruptcy lawyer to represent you in court.
While you may think it is cost-effective to not hire an attorney in the short-term, you will pay way more in the long term if anything goes wrong during the filing process. Filing for bankruptcy is a complicated process that requires many steps and knowledge to properly navigate. Any wrong step can throw out your case or lead to an unfavorable outcome. Worse yet, if you do not know the laws, you could put your property at risk.
Can You Legally File for Bankruptcy Yourself?
The short answer is yes.
There is nothing legally keeping you from filing for bankruptcy and representing yourself in court. This is called Pro Se, or “filing on your own”.
It is possible to represent yourself, but it requires a lot of time, knowledge, and management skills to successfully pull off.
What Can Go Wrong When Filing for Bankruptcy?
Filing for bankruptcy is a time consuming and complex process that requires a lot of paperwork and time management skills. Many things can go wrong along the way, and you need to have a clear idea of how every step works and what’s required of you.
Because of this complexity, filing either Chapter 7 or Chapter 13 requires specific knowledge, paperwork and information and deal in different types of asset management. It can be a lot to handle if your sole focus isn’t on the case.
Here’s what can go wrong:
- File for the wrong chapter: The most common bankruptcy chapters are Chapter 7 and Chapter 13. Both types come with different requirements and solve specific problems with your debt. That’s why it’s important to fully understand your situation so you file for the correct chapter.
- Fail to file all of the required documents: In order to properly file for bankruptcy, you have to complete many lengthy forms from different sources. There’s the federal packet which you’ll find anywhere, along with your local forms provided by the court. If any document is not turned in, your case will be dismissed.
- Fail to file on time: Even if you do complete all of the required documents, you still need to turn them in to the proper parties at the specific due time. If you fail to do so, your case can be dismissed.
- Failing to protect property: Part of filing for bankruptcy is taking advantage of property exemptions. Yet, it’s very easy to forget some properties or fail to list the proper exemption. This puts you at risk for losing your valuable property if left unprotected.
- Failing to take required courses: An important step in filing for bankruptcy is taking the required credit counseling courses from approved providers. If you fail to take the proper financial management course, or don’t file the right certificate, then your case can quickly be dismissed.
- Fail to properly defend against motions for adversary actions: While most Chapter 7 and Chapter 13 cases go fairly smoothly if done properly, there’s always the chance that something can go wrong. One of your creditors can challenge whether a debt can be discharged, or the bankruptcy trustee can accuse you of committing fraud. If any of your documents or court motions are filled out improperly, you risk losing your case.
The Benefits of a Bankruptcy Attorney
Bankruptcy cases are complicated no matter what chapter you file for the amount of assets and debts you have. Because of this, it’s always a good idea to consult with an attorney before taking the first step. At Cravens & Noll, we do not charge a fee for the initial consultation. A skilled and experienced bankruptcy attorney can help you:
- Find the right bankruptcy chapter for your situation
- Keep track of the documents and financial information you need to file
- Direct you to the right courses and certifications
- Create a repayment plan that’s within your best interests and appeases the court
- Defend you in court in case a creditor, trustee, or judge tries to push back
- Ensure from the outset that you will receive a discharge and relief from your debt
Consult Richmond’s Finest Bankruptcy Attorneys
When you’re considering filing for bankruptcy, make sure to call the bankruptcy attorneys at Cravens and Noll. Your initial consultation is at no cost. There really is no reason not to take some time to see how we can help you.
Our Richmond based law firm has decades of in-court experience in both Chapter 7 and Chapter 13. We work with you throughout the entire process, defending your best interests and ensure you get back on your feet with a fresh financial start and use your time to focus on other important things in your life.
Schedule a consultation to start taking control of your financial situation.
January 5, 2021
For many people in debt, it can feel like they have nowhere left to turn. After amounting various debts, like late mortgage payments or mounting credit card debt, it can seem impossible to get out of that hole.
One option is to declare bankruptcy. Despite many people filing for bankruptcy, the term and process still has a scary connotation behind it.
Bankruptcy is designed to give debtors a second chance to rebuild their finances with as little stress as possible.
Still, the process of declaring bankruptcy still has some secrecy behind it, and is not without consequences.
In this post, we’ll look at exactly what happens and what you need for when you declare bankruptcy.
Understanding Bankruptcy in Virginia
Before you file for bankruptcy in Virginia, it’s important to understand exactly what it is and how it affects you.
Bankruptcy is a legal process that works to help you pay off your debts. This can be through reduced monthly payments, restructuring your finances or, in rare cases, eliminating your debt.
You can either file on your own, or hire a bankruptcy attorney to help you navigate through the proceedings. With an attorney on your side, they can help you determine what type of bankruptcy you should file under.
Going Through the Filing Process
Before you can officially declare bankruptcy, there are a few steps you need to take. The first one is prior to contacting a lawyer, the others are with the assistance of a lawyer.
1. Gather Your Complete Financial Records
Before working with anyone, it’s important to have a full understanding of your financial situation. You have to compile your total debts, assets, expenses and income.
You’ll not only have a grasp on your own finances, but this will help your advisors and the court to understand your situation.
2. Meet with a Bankruptcy Counselor
In the U.S, anyone filing for bankruptcy is required to attend bankruptcy counseling at least 180 days before filing. At Cravens & Noll, after you meet with our bankruptcy attorney, we will refer you to the credit counseling company that you can complete the court required course.
This shows that you have done everything to try and avoid bankruptcy. The counselor must be approved by the U.S. Courts, and these classes can usually be done online or over the phone.
Once you’ve received your certification, We will obtain the certificate to file along with your other bankruptcy paperwork.
3. File Your Bankruptcy Petition
It’s time to actually file for bankruptcy. At this point, it’s highly recommended that you hire an attorney.
While not required, an experienced bankruptcy attorney can help your case by explaining various laws, the judicial process and legal representation in the court. We work along side our clients to ensure every step of the process is handled professionally and correctly.
4. Meeting of Creditors / Trustee Hearing
Once your bankruptcy petition is accepted by the court, you’ll be assigned a court trustee. The trustee then sets up a meeting between yourself, your bankruptcy lawyer and the creditors.
It is rare that creditors show up at this meeting, rather it is primarily for the trustee to ask you questions and have you swear under oath that all of the information in your bankruptcy paperwork is correct and true.
It’s important that when you do decide to file, you follow the proper steps. If you fail to do so, it could affect the outcome of your case.
Meet With Our Experienced Bankruptcy Attorneys
Now that you understand how to file for bankruptcy, it’s time to get your affairs in order. Before starting this process, it’s important to have an experienced attorney on your side. With a lawyer in your corner, they’ll be able to answer any of your questions, help you get on the right track and represent you in court. The bankruptcy attorneys at Cravens & Noll have years of experience in Chapter 7 and Chapter 13 bankruptcy cases.
Contact us today to set up an initial meeting, and begin your journey towards freedom from debt.
November 7, 2020
The simple answer to this question is that most or all of your debts are cleared when you declare bankruptcy. Of course, this also depends on the particular chapter that you file under. Regardless, bankruptcy is what happens when the debts you owe outweigh the amount of money you make in order to pay those debts.
Oftentimes, bankruptcy is the final resort for people who are looking for a fresh start to their finances and a way to clean their slate of dischargeable debts.
In this blog post, we’ll go over all the basics you should know when it comes to filing for bankruptcy.
When to File for Bankruptcy
There are few telltale signs that indicate it may be time to consider filing for bankruptcy. While there tends to be a negative connotation associated with bankruptcy, it can offer more advantages for those in serious revolving debt than not.
If you are experiencing the following, consult with a qualified bankruptcy lawyer at Cravens & Noll to discuss your filing options:
- Your wages are being garnished
- You’re using credit cards to pay for everything
- You’re using your retirement account to pay for bills
If any of these are happening to you, and you find that you are in what seems to be an unending cycle of debt piling on top of debt, it may be time to declare bankruptcy.
When you successfully file, whether it’s Chapter 7 or Chapter 13, a court-mandated automatic stay is put on your account which prevents creditors from trying to collect on your debts. This means they can’t garnish wages, take money from your bank account or try to take any of your other assets.
Known as the liquidation chapter, this chapter is common for people who are in very severe debt with limited income. Only in very rare cases does bankruptcy take your state’s nonexempt assets and sells them off to pay creditors. In fact, in almost all Chapter 7 cases you will be able to keep all of your property.
To be eligible for this chapter, you must make under your state’s household income level or go through a “means test” to determine that you don’t have enough disposable income to repay the debts.
Once successfully filed, a filer will be cleared of their dischargeable debts within 3-5 months from the start date of filing. When a debtor files under this chapter, a bankruptcy note on their credit report will remain there for 10 years.
Chapter 13, referred to as wage earner’s plan, is for the filers who are making a consistent income but still have a large amount of unsecured and/or secured debt. This filing is usually a 3-5 year repayment plan and, once completed, will clear the debtor of most or all of their debt. When a debtor successfully files under this chapter, there is a court-approved repayment plan that your attorney creates for you. In that plan, the debtor makes regular payments to a bankruptcy trustee who then distributes the funds to the appropriate creditors/lenders. You can modify the loans that you have outstanding debts on per your repayment plan in this chapter.
Because you are still making payments on your loans when you file under this chapter, the bankruptcy note on your credit report will remain there for 7 years as opposed to Chapter 7’s 10 years.
Advantages & Disadvantages of Bankruptcy Filings
The primary reason to file for bankruptcy is that it gives debtors a fresh start to begin rebuilding their finances. More times than not, bankruptcy is a last resort for people dealing with a revolving door of debt. A bankruptcy filing also prohibits creditors from attempting to collect during the filing process, relieving debtors of that additional stress.
The disadvantages that come with a bankruptcy filing are usually due to how it affects a filer’s credit score. Regardless of if you file for Chapter 7 or Chapter 13, there will be a note on your credit report, making it a bit more difficult to receive loans.
On the positive side, the process of filing, whether it’s Chapter 7 or Chapter 13, gives you a chance to rebuild your score and, oftentimes, requires a credit counseling/financial literacy course to help debtors become more aware of how to properly handle their finances.
Bankruptcy Attorneys at Cravens & Noll
The first step in any process of a bankruptcy filing is to get connected to a qualified bankruptcy attorney. Speaking first with a lawyer will help clear up which chapter you are best suited to file under, what property you can keep (which often is all of your property), which assets are protected by your state and which is the best repayment plan (if you file under Chapter 13) for you.
The lawyers at Cravens & Noll P.C. have hundreds of cases and can help you understand the benefits and risks of filing for any chapter of bankruptcy.
Are you thinking about filing for bankruptcy? Get in touch with us today to handle your financial needs.
August 25, 2020
It’s perhaps the most asked question by a debtor when they are considering filing for bankruptcy. An item on your credit score can be scary. How long does the filing stay on your report? Will you be able to borrow money after filing? How will you be able to rebuild your credit afterward?
In this blog post, we go over these questions, how bankruptcy affects your credit score, and how you can rebuild it.
The Essentials of Bankruptcy in Virginia
When you file for bankruptcy, it means you are unable to pay on some or all of the debts you owe.
The two most popular types of bankruptcy filings are Chapter 7 liquidation and Chapter 13 wage earner’s plan for debtors. Which chapter you file under will depend on your income and if you hold the ability to pay a portion of the accrued debts or not. The Chapter to file under will also depend on whether you have too much property that may not be protected within a Chapter 7 bankruptcy.
The bankruptcy chapter you file under will determine how long a bankruptcy filing stays on your credit report. Typically, that’s either 7 or 10 years.
What is a Credit Report?
A credit report is what loaners, banks, and other lenders use to determine if a person is able to pay their debts on time. When it comes to getting loans like a mortgage, car loans or a credit card, a credit score report is the first thing creditors examine.
The higher your credit score, the more likely you are to be approved for a loan at a lower interest rate than if you had a lower credit score.
Filing for any bankruptcy will affect your credit score, but it doesn’t make it impossible to rebuild your credit.
How Chapter 7 Bankruptcy Affects My Credit in Virginia
If you are filing for Chapter 7 liquidation, it means you have a very limited income and are unable to pay on your debts. Liquidation bankruptcy can sell your nonexempt assets to creditors to help pay off a portion and then wipes your financial slate clean. The filing process for this chapter will usually take between 3-5 months.
Usually, these filers have their unsecured debt (debt without collateral) discharged and no payment is required.
If you’re filing for this chapter, then you will have the filing on your credit report for 10 years.
A Chapter 7 filing will stay on your credit score longer than any other bankruptcy filing because most or all of the debt is unpaid for and no repayment plan is required.
How Chapter 13 Bankruptcy Affects My Credit
Unlike Chapter 7 bankruptcy, Chapter 13 requires a 3-5 year repayment plan after filing.
Also known as wage earner’s plan, this chapter is for those who have a consistent income. The repayment plan of this chapter works to pay off part or all of unsecured debts (credit cards, medical bills, etc.) and can pay past due payments on secured debts like car or house payments.
Because there is some sort of repayment of debts involved in this chapter, the filing stays on your report for a shorter amount of time than Chapter 7.
Chapter 13 bankruptcy will stay on your credit report for 7 years.
For both of these chapters, the time that a filing is on your credit report begins immediately when you file.
This means by the time your repayment plan for Chapter 13 is completed, you will be nearly halfway to not having the filing on your credit. While the filing is on your credit report, you may still be able to borrow and be approved for loans.
However, the interest rates of these loans will be substantially higher than they would otherwise.
Rebuilding My Credit After Filing for Bankruptcy
Rebuilding your credit after filing for bankruptcy may seem impossible, but it’s not.
Most of the time, chapters of bankruptcy require some sort of credit card counseling and financial help courses for debtors. This is to help the debtor become more aware of the proper ways to handle their finances.
On the same coin, for either chapter, a filer will have 7-10 years to rebuild their credit and begin a solid payment history.
In many cases, in order to rebuild your credit after bankruptcy, you need to obtain, use, and timely pay your debts. For example, after your bankruptcy is complete, you can obtain a credit card with a very small limit. You should only use the credit card for a necessity like groceries or gas that you would otherwise pay cash for. And each month you pay off that credit card. Over time your credit limit can increase which is one factor credit agencies use to determine your credit score.
Finding the Right Bankruptcy Lawyer
Sometimes bankruptcy is the best option to go with if you’re dealing with debt that seems unbearable and never-ending.
The bankruptcy lawyers at Cravens & Noll, P.C. have years of experience in dealing with cases and are ready to fight for your needs.
Any questions about bankruptcy, which chapter to file for, or how to rebuild credit? Give us a call today!
August 20, 2020
Bankruptcy. It’s a word that can be terrifying, especially when you aren’t familiar with the process, the chapters to file for, the potential consequences or if you don’t know any qualified lawyers.
The lawyers at Cravens & Noll have years of experience dealing with bankruptcy cases and are here to make the process as seamless as possible.
To get started, it’s important to know what exactly bankruptcy is.
Essentially, bankruptcy is the legal process an individual or entity undergoes when they don’t have the financial means to pay on the debts they owe. These debts can range from secured to unsecured. When a debtor files for bankruptcy, depending on which chapter they file for, they will be relieved of most or all of their debts.
Bankruptcy can help people get back on their feet and allow them to start anew, financially. After a successful bankruptcy filing, you get an automatic stay on your account, meaning that creditors are prevented from collecting.
Knowing what type of chapters are best suited to you is one of the first steps to take in a bankruptcy filing.
The Chapters of Bankruptcy
The most common types of bankruptcy that debtors file under are Chapter 7 and Chapter 13 bankruptcy. Chapter 7 is also known as liquidation while Chapter 13 is regarded as Wage Earner’s Plan.
Typically, debtors decide which one to file under depending on their state exemptions and their total household income, as well as their interest in any property that may have equity (value minus any loans for the property).
With each chapter, there are a number of advantages and, of course, some disadvantages. While each chapter filing will affect your credit, most of the time it is far more advantageous for debtors to claim bankruptcy than to continue making payments that they don’t have the money for.
Liquidation refers to the bankruptcy chapter where debtors resell their assets to pay off their debts. This chapter deals with secured and unsecured debt and is the quickest way to relieve you of your debts. For those with very limited incomes, Chapter 7 usually takes 3-5 months and will use the money obtained from property resale to pay off creditors.
Wage Earner’s Plan is the chapter of bankruptcy reserved for those who are in debt but still make enough of an income to reorganize their payments to creditors. Chapter 13 uses a 3-5 year plan to pay creditors the amount owed to them. As with Chapter 7, this chapter helps to clear a debtor of their secured and unsecured debts.
When to File for Bankruptcy
There are a few telltale signs that indicate it may be time to consider filing for bankruptcy. We have compiled a short checklist to determine if bankruptcy may be the best option for you and your family.
- You’re behind on bills and debt collectors keep calling
- You’re using loans to pay bills
- Your home is at risk of foreclosure
- Your credit card is your primary source of payment
Contact Us Today
Bankruptcy cases are always different and the needs of each debtor vary. The best way to ensure a positive outcome with a filing is to get connected with experienced bankruptcy lawyers. The lawyers at Cravens & Noll have years of experience with thousands of cases handled. Give us a call today to discuss your financial options and whether bankruptcy is the best route for your financial future.
May 26, 2020
Bankruptcy can be a scary process when you do not know what property is at stake. When people file, one of their fears is that they will lose essential property such as their car or their house.
Based on state bankruptcy exemptions, the equity value of your property, homestead protection laws, and what chapter you file for, filers can have a better likelihood of keeping both their car and home during the bankruptcy process.
Depending on whether you file for Chapter 7 liquidation or Chapter 13 wage earner’s plan, will determine what you will owe, how and if you can keep your car and home.
The Difference Between Chapter 7 & Chapter 13
Firstly, it is important for filers to understand the basic differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy in Virginia.
Chapter 7 is known as liquidation. Even though it is called “liquidation”, most Chapter 7 clients keep all of their property, including their car and house. This is because of certain exemptions that protect certain property. If you have only a little equity in your car or house, you should file for this type of bankruptcy.
In Chapter 13 bankruptcy, a debtor begins to pay back their creditors through a repayment plan. These repayment plans will usually take 3-5 years. Because a filer of Chapter 13 bankruptcy has enough of an income to continue making payments on their debts, their risk of losing their property is significantly lower compared to Chapter 7 filers.
The best determinate in knowing what property you can keep during a bankruptcy filing is your state’s bankruptcy exemptions.
Each state varies in their exemptions — the equity on your property that is protected against a bankruptcy trustee reselling it to pay off creditors.
Simply put, bankruptcy exemptions tell you how much of your property you get to keep.
For Chapter 7 bankruptcy, these state exemptions can protect your assets if their equity value is covered. For Chapter 13, these exemptions can help lower the payments to your creditors and lenders for your repayment plan.
Read more about the specifics on Virginia state exemptions for motor vehicles and residential property based on each chapter.
What Do I Keep When I File Chapter 7?
Each bankruptcy case will vary depending on the equity in your car or house, how much you owe to creditors, your household income, number of dependents, etc.
Chapter 7 filers can maintain their property in cases where the amount of the property equity is either equal to or less than the state exemption amount. Equity in your property is the difference between the current value of the property and how much you owe on it.
For instance, if you have a car worth $8,000 at current market value, but you owe $3,000 on it, you have an equity value of $5,000.
Similarly, with a home, if you owe $7,000 on a house that is currently worth $16,000, you have an equity value of $9,000.
Virginia Motor Vehicles Exemptions
Under Virginia law, filers have up to $6,000 in equity for their motor vehicles. In a joint case with a married couple, each spouse has up to $6,000 for a car in their name. This means that $6,000 in equity is protected from resale by an appointed bankruptcy trustee.
Your car will be protected in Chapter 7 bankruptcy filing if its equity is equal to or less than $6,000.
In some cases, if your vehicle’s equity is over the $6,000 exemption, you will have the option to use an unused portion of Homestead Exemptions (up to $5,000) in Virginia.
If the equity in the property does not amount to the $6,000 exemption, you will likely keep your vehicle. Trustees can deem it unworthy of sale, meaning the time and money put into resale would cost more than what the car is worth, leaving the trustee with nothing to pay creditors. In this instance, you would keep your car.
Virginia Homestead Exemptions
Virginia’s Homestead law exempts $5,000 for residential property, personal property, or both. Alongside the $5,000 exemption, there is an additional $500 per dependent that goes towards protecting your property. This exemption will double to $10,000 if you are a disabled veteran or if you are over 65 years old.
To receive the $5,000 exemption, you must file a homestead declaration prior to or after filing for bankruptcy. However, it must be filed within five (5) calendar days after your meeting of creditors. If the exemption is not enough to cover the entirety of your house’s equity, then a trustee appointed by the court can sell it and pay off your unsecured debt with the proceeds.
On the other hand, you will be able to keep your house if you are currently paying your house payments and/or the total exemption covers the equity of your home (value of your home less what you owe on it).
In total, exemptions are set in place to help filers keep inexpensive property that is vital in order to work and live. To have the best chance of securing your property, you should consult with the lawyers at Cravens & Noll, who specialize in bankruptcy. Having legal counsel during the bankruptcy process can help save your property.
What Do I Keep When I File Chapter 13?
Chapter 13 bankruptcy differs from Chapter 7 in that it puts filers on a repayment plan to pay back outstanding debt to creditors. In some cases, this can be the safest option to ensure you keep all your property fully protected. Typically for these bankruptcy filings, debtors will not lose any of their property.
Chapter 13 is specific to those still earning an income and it allows debtors to reorganize debts. With this filing, you may be able to pay less on some of your debts. The amount that you will pay creditors, however, depends on the amount of property that can be exempt through exemptions in the state of Virginia.
The nonexempt equity amount of your property is used to determine what you will pay on during your 3-5 year repayment plan for Chapter 13 bankruptcy. This is called the “liquidation analysis”. For example, if your house has $20,000 in non-exempt equity, then at a minimum your repayment plan must pay your general unsecured creditors at least $20,000. To do this, you will have to prove you have enough income to pay on the amounts required in your repayment plan.
Virginia Motor Vehicle Exemptions
Because this chapter of filing is for those who earn an income, it focuses on repaying the entirety of your nonexempt equity on your vehicle. If you have a car loan, your repayment plan will include monthly payments on your loan.
With the $6,000 exemption in equity, filers will not have to pay that amount during their repayment plan because it falls under state exemptions.
For instance, if you own a car worth $15,000 and you owe $4,000 on it, the equity of your car is $9,000. Virginia’s motor vehicle exemption protects $6,000 of this amount, leaving $3,000 as nonexempt. In this case, your repayment plan will have to include $3,000 of nonexempt equity to pay back to general unsecured creditors.
As with cars, bankruptcy trustees cannot take your home in a Chapter 13 filing. If you are short on a mortgage payment but want to keep your house, your repayment plan will have to include the nonexempt equity of your home and the mortgage payments.
To qualify for this chapter, you will have to prove your income is enough to cover what you owe within 3-5 years. Since the exemption is $5,000 and $500 per dependent per Virginia’s Homestead laws, the nonexempt equity after these exemptions is what will have to be paid to creditors through your plan.
Simply put, you can keep your nonexempt property, but you will have to pay your creditors an amount that is equal to the nonexempt value of your property.
For example, if your home is worth $150,000 but you have a mortgage balance of $50,000, your home’s equity is $100,000. The amount of exempt equity depends on whether you have dependents, are a disabled veteran or over 65.
When the exemptions are taken into consideration, whatever is left of nonexempt equity is the minimum amount you will have to pay your creditors during your payment plan.
Contact Cravens & Noll Bankruptcy Law Group
The best way to be sure you are getting the best results from your bankruptcy case is to consult with lawyers who specialize in this area. With years of experience, the lawyers at Cravens & Noll are ready to protect your car and home amid your bankruptcy case.
Worried about if you will lose your home and car? Contact us now for a free initial bankruptcy consultation
May 14, 2020
As one of the largest property investments people make, homes can be a serious concern when it comes to knowing what property you will be able to keep when you file for bankruptcy.
Will I be able to keep my house? Does a bankruptcy trustee have a right to sell my home? What exemptions do I have?
These are all valid questions. Home protection varies from case to case depending on which chapter you file for, the amount of equity on your home and what you owe. However, there are some basic guidelines to understand what can happen in a bankruptcy filing.
If you’re not sure if your home is protected against creditors, read this article and get in touch with specialized lawyers to understand your bankruptcy options.
The Difference Between Chapter 7 & Chapter 13
Chapter 7 bankruptcy, also known as liquidation, is typically used to relieve the debts of those with a very limited income. This short-term plan allows filers to have a financial fresh start. During this filing process, you liquidate all your unprotected or non-exempt assets to pay off your debt. These assets are any property that maintains an equity value and can be sold to creditors to pay off debts. However, if you have very little equity in your home you will most likely be able to keep your house along with most if not all of your other property. If filing a Chapter 7 bankruptcy puts you at risk of losing any of your property, then Chapter 13 bankruptcy may need to be considered.
Chapter 13 Wage Earner’s Plan is used for people who still have a steady income but have fallen behind on payments or have found themselves unable to pay a large portion of their secured and unsecured debts. Chapter 13 is also considered if you have too much equity in your house. Some people have to file Chapter 13 because they earn too much income or have too much money left over each month.
This chapter focuses on repaying the creditors over a 3-5 year plan. This long-term alternative will clear your financial slate when the plan is successfully completed. Depending on how much you earn, how much you have left each month after paying your normal bills (rent, utilities, food, clothing, etc.), or how much equity you have in your house will determine how much of your debt has to be paid back in Chapter 13.
As for your property, Chapter 13 generally protects your property but, again, will require a stable income to pay off your debt within the duration of the repayment plan. Chapter 13 works with creditors to create this 3-5 year wage earner’s plan to cover debts.
Can I Protect my Home Under Chapter 7 or Chapter 13?
The only way to protect your home under a Chapter 7 filing is if you:
- Are current with your house payments
- You have very little if any equity in your home (equity is the difference between the value of your home vs. how much you owe on the mortgage).
Under Virginia state bankruptcy exemptions, a filer has what is called a Homestead Exemption to use up to $5,000 to protect any non-exempt property. The $5,000 is a lifetime exemption, meaning if you file bankruptcy again in the future, you will only be able to use the part of the $5,000 that was not already used. It can be used to protect money in the bank, stocks, etc. Sometimes if you have a small amount of equity in your house, we use part or all of the $5,000 to protect that equity.
There is an added exemption of $500 to each dependent in the household that is protected under the bankruptcy exemption laws in Virginia. For disabled and over 65 year old debtors have an exemption of up to $10,000 in equity.
If you file under Chapter13 bankruptcy, you have the ability to catch up with mortgage payments in your repayment plan and it will be unlikely that you will lose your home provided you make all of your mortgage payments after your bankruptcy is filed.
As long as you keep up with your payments, creditors cannot take your home from you in this chapter.
Hire a Qualified Lawyer
Each bankruptcy case varies. The best thing to do to ensure you have the greatest chance to keep your home is to get in contact with bankruptcy lawyers.
Qualified counselors such as those at Cravens & Noll Bankruptcy Firm have handled hundreds of bankruptcy cases, specializing in this area of law. If you are considering bankruptcy, please give us a call today!
April 24, 2020
Your motor vehicle can oftentimes be the only thing that can efficiently get you to work, to school, to the store, to take care of others, and to help accomplish other essential tasks. When bankruptcy becomes the only option to help keep you and your family afloat during financial tribulations, you need to know what property is exempt from repossession. That’s why it can be particularly nerve-wracking to know if you can keep your car in a Chapter 7 bankruptcy filing.
How Much Do You Owe on Your Car?
One of the main qualifiers that decide whether or not you can keep your car is the amount you owe on it. Typically, when courts are deciding what property can be sold to creditors, there is a specific process they follow.
The equity in your car is simply determined by the value of the car less the car loan. If the amount that you owe is not enough to cover the equity value of your car, then creditors have the potential to repossess and sell it. Simply put, the value of the car cannot exceed the amount you owe when you file.
If all of the equity value of your car is protected through the motor vehicle exemptions of Virginia, then you can keep your vehicle. This means that your car’s market value is exempt to creditors.
What Is Protected Under Virginia Law?
Under Virginia bankruptcy law, there are a number of properties that are exempt from repossession or resale by creditors and lenders. The most common examples of property exemptions for bankruptcy in the state of Virginia include the following:
- Cemeteries and burial funds
- Claims for personal injury and wrongful death actions
- Health savings account
- Homestead or residential property
- Insurance benefits
- Motor vehicles (up to $6,000 in equity)
- Pension and retirement benefits (provided they are ERISA qualified)
- Household goods and furnishings (up to $5,000)Firearms (up to $3,000)
When it comes to motor vehicles, Virginia gives filers $6,000 in equity to protect their cars.
For example, if you own a car that is worth $5,000.00 and there is no loan on the car, you have $5,000 in equity. The bankruptcy exemption of $6,000 is more than enough to protect your car and you will keep your car.
If your car is worth $5,000 and you owe more than $5,000, then you have no equity in the car so it is of no value to the bankruptcy trustee and they will abandon their interest in your car. Even if the equity in your vehicle is more than $6,000, you will most likely keep your vehicle. This is because you will be able to use part of what is called the Homestead Exemptions (does not have anything to do with a home) up to $5,000. As long as the equity in your car is not much more than $11,000 you will most likely be able to keep your car.
What Happens If I Have a Car Loan?
If you have a loan on your car when you are filing for bankruptcy, there are a few steps you can take. With nonexempt equity on the car exceeding the exempt, you can:
- Surrender the car
- Reaffirm the debt
- Redeem the car
Surrendering the car
This is an option for debtors that wipes clean all of their car debt. When you surrender your vehicle under a Chapter 7 filing, you won’t owe any more payments on the car. If there remains a deficiency (amount still owed after the lender sells the car) you will not owe any of that deficiency amount.
Reaffirming the debt
When a car loan is taken out, the car is pledged as collateral. This makes the loan a secured debt, meaning it can be used to pay off that specific creditor to who the debt is owed. When you reaffirm your debt to keep the car, you continue making payments on it, remaining liable on the debt.
These loan payments will continue through and after the bankruptcy process until it is paid off. This allows you to keep your vehicle as you go through Chapter 7 bankruptcy in Virginia.
There are additional steps that the bankruptcy attorneys at Cravens & Noll can take so that you can keep your car so long as you keep it insured and make timely payments, without actually reaffirming the debt. The bankruptcy judge enters an order allowing you to keep the vehicle, keep it insured and keep making payments, but you are not obligated on the loan if you in the future default on the car loan.
Redeeming the car
You can keep your car by redeeming it during a bankruptcy filing. This means that, as the debtor, you pay your lender/creditor the current market value of your car to clear the remaining debts you owe. For example, if your car is worth $5,000 and you owe $8,000, you can pay a lump sum of $5,000 to the lender to redeem the car, and the $5,000 car is exempt based on the car exemption of $6,000.
With that said, there are lending companies that specialize in redemption cases. Sometimes, the debtor winds up paying much less for the car by using a redemption company rather than trying to reaffirm the existing debt.
If you and your creditor cannot agree on the current market value of the car and how much has to be paid to redeem the car, the bankruptcy court will decide how to proceed.
How to Avoid Losing my Car
While nothing can be guaranteed in a Chapter 7 bankruptcy filing, the best way to ensure you have done everything possible to keep your car is to consult with an experienced lawyer. The lawyers at Cravens & Noll Bankruptcy Law Group have years of experience in protecting you and your property.
Are you concerned about losing your car while filing? Contact us now for your initial bankruptcy consultation.
April 10, 2020
While the term “bankruptcy” can carry a bit of a negative connotation, there are circumstances where bankruptcy is the best option to keep you financially afloat. Filing for bankruptcy can give you the chance to start fresh, alleviate crippling stress and allow you to rebuild your credit, restarting your finances. It’s time we break down the stigma that comes with the idea of bankruptcy. In this article, we address the advantages of filing for bankruptcy.
When you file bankruptcy, it is saying you cannot afford to pay outstanding debt to your creditors. If you are approved for bankruptcy, you will be relieved of the obligation to repay some or all of your debt. Perhaps the biggest advantage of filing bankruptcy is that you financially get to start over again. In some cases of bankruptcy, you may be able to keep your assets while being cleared of your debt.
Protecting You Against Creditors
We know how ruthless creditors can be. Creditors can call on a regular basis and possibly to a harassing degree. When you successfully file for bankruptcy, it will put an automatic stay on your account that prevents creditors from forcefully collecting debts. Along this line, creditors cannot:
- Continue calling you
- Sue you
- Send you letters
- Repossess exempt property that you owed on
Additionally, bankruptcy forbids creditors from shutting off your utilities, evicting you, foreclosing your property or garnishing your wages. Depending on whether you file Chapter 7 or 13 bankruptcy, and the applicable bankruptcy exemptions, you may keep most of your property through the process.
Bankruptcy typically deals with two kinds of debt; dischargeable and nondischargeable. When you file, you can protect your property and may be relieved of any obligations to pay on dischargeable debt. This type of debt follows anything that is unsecured debt. Unsecured debt is when there isn’t any collateral on what you owe. This can be credit card debt, medical debt, personal loans, etc.
When you do not have enough assets that are not exempt or you do not have enough income to pay your creditors, you most likely will be able to file a Chapter 7 bankruptcy. This means that unsecured debt can be forgiven. If you have too much property that is not exempt or your income is such that you are able to at least pay for some of your debt, you may need to file a Chapter 13 bankruptcy. If you file for Chapter 13, you will go through a 3-5 year payment plan to pay back some or all of your unsecured debt. After you complete this plan, whatever amount of unsecured and dischargeable debt that remains will be discharged, and you will be debt-free.
Protecting Yourself and Your Family
A lot of the time, debt collectors can bring tremendous amounts of stress on debtors. Living paycheck to paycheck and having only enough for the essentials can lead debtors to believe there’s no way out. It can be discouraging when you’re thrown into an endless cycle of debt where your credit card balances keeps rising. This is when filing bankruptcy might make more sense than continuing to try to fight through it.
Along with clearing you of your debts, bankruptcy filing requires a debtor to take credit counseling to take all the measures possible to avoid future bankruptcy. Becoming literate in your finances can help strengthen and rebuild your credit.
There are a number of advantages to filing for bankruptcy, but the best way to start is to discuss your options with one of the bankruptcy attorneys at Cravens & Noll, P.C. We will review your financial profile and assess whether this is the right option. Our goal is to help our clients get back on their feet as soon as possible, so we will provide professional legal advice on your best options moving forward.
We know this is a sensitive issue for many people, and we are here to help. Contact Cravens & Noll P.C. today to learn more.
March 18, 2020
If you’ve tried to clear your debts but are finding yourself in an endless hole of living paycheck-to-paycheck, without making a dent in the amount you owe, it may be time to file for bankruptcy. Bankruptcy can be the best option when it comes to giving you a fresh start, financially.
But filing comes with consequences affecting your credit score and ability to get loans.
In this post, we go over available options to help clear debt before filing for bankruptcy and the telltale signs on when you should file for bankruptcy.
What to Do Before You File for Bankruptcy
If you file for bankruptcy, whether it is Chapter 7 or Chapter 13, you must consider the consequences.
In a brief rundown, when you successfully file for either, you will have a public discharge on your credit. The discharge will remain on your record between seven and ten years, depending on which chapter you filed for.
It’s important that you explore other methods of repayment/clearing your debts before you file. Here are the top methods to consider before you resort to filing:
Negotiating with Creditors
One of the first steps to take before filing is to have a discussion with creditors, to those entities/people you owe money to. If you’re relatively late with a payment, it may be in both your and the creditor’s best interest to come up with a settlement. Creditors are more likely to settle a debt than go to court and have that debt discharged in a bankruptcy filing.
In settling your debts, you negotiate with the creditor to accept a lump-sum payment to satisfy the debt you owe. This can clear you of that debt while avoiding a bankruptcy filing.
Typically, you can settle unsecured debt in one of two ways. You can either use a debt settlement company or do so on your own. But you should also be aware of tax implications when you pay less than what is owed.
Another option to avoid bankruptcy is to consider credit counseling. A consumer credit counselor can get a debtor lower monthly payments and interest rates if creditor negotiations are unsuccessful. Consumer credit counselors are representative of nonprofit agencies that work to find you reasonable solutions to financial issues. These counselors can help you create a good and workable budget to help you pay your debts on time on a month-to-month basis. When you find yourself looking for a credit counselor, be sure you’re wary of potential scammers.
Payment Through Savings and Assets
If there are assets that you own that you are willing to sell off to pay creditors, then it may be an option to resell. When you file for bankruptcy, you’re required to list assets, (secured and unsecured) to determine if the value of those assets can pay off your debt. Similar to the value of assets, the amount in your savings account can contribute to paying off your owed debt as well. If you are finding yourself with little to no available savings to pay back your debt, then it may be time for you to get an attorney and file for bankruptcy. But keep in mind there are many assets protections in bankruptcy for which you do not need to sell.
When You Know You Need to File
Apart from having the value of your assets and available savings failing to make a dent in your debt, there are a number of signs that indicate it may be time to file either Chapter 7 or Chapter 13 bankruptcy.
Here are four circumstances that call for, at the very least, a consideration of bankruptcy filing.
Wage garnishment occurs when creditors or lenders file a suit, or have a court order, to take portions of your paycheck to pay off your debt. This garnishment usually takes a percentage of your company wage, dependent on the amount of disposable income on your paycheck. Filing for bankruptcy automatically stops garnishment and can even help recover lost wages.
Paying With Credit Cards
If you find yourself in a cycle of more and more debt, with your only form of payment being credit cards, then bankruptcy can help break that cycle. When you continue to pay for necessities with credit cards, your debt continues to accrue, making financial stability seem impossible. That is a telltale sign that bankruptcy may be your best option. Chapter 7 bankruptcy usually clears you of credit card debt, giving you a financial fresh start.
Using Retirement Account to Pay Bills
Retirement accounts are not meant to be touched until you retire. This means that when you do decide that your debts are too overwhelming to avoid dipping into your retirement funds, you’ll be penalized a percentage of those hard-earned savings. When you file for bankruptcy, pensions, life insurance policies, 401(k)s and IRAs are likely to be protected. In this case, filing can save you from needing to take out funds and receive additional penalties, while clearing you of your debt.
Debt Exceeds Income
Similarly to when you assess the worth of your assets and savings, when your debt is more than what your regular income is, bankruptcy becomes the best choice to resolve your financial issues. When the amount of your disposable income (income that is not put towards living necessities) doesn’t cover your debt, it can cause you to fall even more into debt.
If you’ve exhausted all the options to clear you of your debt such as credit counseling, debt consolidation, management or settlement, then it’s time to get a lawyer and discuss your options regarding bankruptcy filings. It’s important to remember that a minor discharge on your credit may be the best outcome if you feel as though you cannot escape the revolving wheel of impending debt. Get in touch with us today.