What Is Bankruptcy

What Is Bankruptcy

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.   

Chapter 7

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. 

Chapter 13

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. 

Schedule a Consultation Today

Are you wondering if you have a case? Our attorneys combined as a team have hundreds of years of experience dealing with all kinds of legal cases throughout Richmond, Harrisonburg, and all over Virginia. It is our goal to serve our clients with the utmost integrity, respect, and dignity regardless of your circumstances.

When you complete this contact form, you’ll be contacted by one of our representatives to get more details regarding your inquiry. Our firm is committed to representing our clients’ rights to ensure you receive the most favorable results possible.

As with many legal issues, minutes matter. The evidence fades, witnesses disappear, and the stories change. If you’re facing an urgent legal matter, don’t delay in calling us. Cravens & Noll can provide immediate hope to your situation.

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