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Richmond Virginia Bankruptcy Law Blog

How do Chapter 7 and Chapter 13 bankruptcies differ?

Once debt begins to spiral out of control, it can become increasingly difficult to get a handle on your finances, and if you are among the many Virginia residents facing mounting debt, you may be considering filing for bankruptcy. Most people who file for personal bankruptcies do so either through a Chapter 7 or a Chapter 13 filing, but there are some important differences between the two types.

Per the American Bar Association, a Chapter 7 bankruptcy involves, in simple terms, liquidating your assets, while a Chapter 13 bankruptcy involves restructuring them to make them more manageable. Typically, should you decide to move forward with a Chapter 7 filing, you will need to surrender any assets you have that are not “exempt.”

Bankruptcy myth: You can end your child support obligations

Divorce is often the source of financial difficulty, as people have to split their assets and savings while simultaneously incurring substantial expenses from their personal attorney and the courts. Beyond that, there is the potential financial impact of the requirement to pay child support and spousal support, also known as maintenance or alimony.

When you already have a tight budget, needing to send a couple hundred dollars a month to your ex or your kids can make it impossible for you to cover all of your costs. As the debt you have to worry about begins to increase, you may find yourself considering bankruptcy as a way to alleviate the pressure from creditors. Understanding the limits of bankruptcy for divorced parents is important.

What constitutes marital property in a divorce?

If you are filing for divorce in Virginia, you may be faced with a host of issues that must be resolved before creating a divorce settlement. One of the most difficult topics to tackle may be that of property division. With emotions running high, it can be hard to determine who is entitled to what in the final settlement. Whether you are going through a court-room divorce and it is up to the judge to decide the fate of your property or you are dividing your property through mediation, it is important to know what marital property entails. 

Many believe marital property is simply your family home, vehicles, furniture and contents of your bank account. Yet, it is actually much more. The following are also considered marital property:

Credit counseling required before filing for bankruptcy

Many residents of Virginia are struggling tremendously to stay on top of their bills and finances, and if you count yourself among them, you may be thinking about filing for bankruptcy as a method of getting your affairs back in order. At Ferriswinder, PLLC, we recognize that there are certain steps you must take as you navigate the bankruptcy process, and that one such step involves participating in credit counseling prior to filing.

Per the Federal Trade Commission, anyone who wishes to file for bankruptcy must receive credit counseling from a government-approved entity within the 180 days ahead of your official filing. The U.S. Trustee Program within the U.S. Department of Justice maintains a list of approved providers you can reference before selecting one to use.

Why does gray bankruptcy happen?

If you are a Virginia senior citizen whose income consists mainly of Social Security, you know how difficult it is to stretch your money far enough to cover all of your monthly bills. In fact, you may be facing financial difficulties severe enough that you have begun to contemplate filing bankruptcy.

Per the New York Times, the rise in bankruptcy filings by people 65 years of age and above has gotten to the point where the phenomenon now goes by the name of gray bankruptcy. In comparison to the 2.1% of people in your age category who filed bankruptcy in 1991, today that percentage has risen to 12.2%.

Will you lose your home if you file for bankruptcy?

As a resident of Virginia who is struggling to keep up with your bills, you may be looking for ways to make your finances more manageable, and you may be considering whether filing for bankruptcy might bring you some relief. If you are like many other people facing similar circumstances, though, you may have serious concerns about whether you could potentially lose your home, should you move forward with filing.

So, how can you tell if you could potentially lose your home when you file for bankruptcy? According to the Washington Post, there is no single, clear-cut answer to whether you will lose your home after filing for bankruptcy, because the answer will ultimately depend on certain variables. One such variable involves the type of bankruptcy filing you choose to pursue.

How to cut costs during divorce

While divorcing your Virginia spouse can take a serious emotional toll on you, it can also take a financial one, but the good news is, you have at least some level of control over how much your divorce ultimately costs you. At Ferriswinder, PLLC, we recognize that there are a number of steps you can take to substantially reduce the cost of your divorce, and we have helped many people pursue uncontested divorces and employ other strategies to save themselves money amid their splits.

Per Forbes, the average divorce can cost you somewhere between about $5,000 and $50,000, with geography, among many other factors, playing a role in how much your divorce winds up costing you in total. Ponying up that amount before you officially go your separate ways, though, can make it exponentially harder to put down a down payment, come up with a security deposit or otherwise prep for life on your own. Therefore, figuring out how to cut divorce-related costs may well be in your best interests.

Bankruptcy myths: It ruins your credit for life

One of the most common concerns that people express about bankruptcy is that they believe it is going to ruin their credit. They worry about buying a car, buying a house or getting a credit card. They think they will never have a financial future at all if they decide to file for bankruptcy now.

Not only is this a common concern, but it's also one of the most prevalent bankruptcy myths. Yes, bankruptcy does lower your credit in the short term, but it does not ruin it forever. You could even argue that filing for bankruptcy is far better for your long-term credit than not doing so.

How much is a Virginia bankruptcy?

Bankruptcy costs vary throughout the country. In Virginia, the cost of your bankruptcy could depend on various factors, such as which attorney you select to handle your case, the complexity of your situation and the type of bankruptcy you need. Chapter 7 is usually cheaper, whereas Chapter 13 is often more expensive. Per Debt.org, average filings cost between $1,500 and $4,000.

However, making your debt relief decisions based on short-term concerns, such as court fees, is rarely a good strategy. Bankruptcy should provide a way for you to put your life back together after unmanageable debt makes things unbearable. You will probably feel the consequences of and reap the benefits of this process for years to come. 

Tips for rebuilding credit after bankruptcy

Many residents of Virginia have found themselves struggling with their finances, and many people who have done so have ultimately found relief through filing for bankruptcy. At Ferriswinder, PLLC, we recognize that, while filing for bankruptcy can be a great way to find your way back to financial freedom, doing so can also hurt your credit, at least in the short-term.

So, is there anything you can do to minimize how much filing for bankruptcy impacts your credit? According to NerdWallet, there are several strategies you can employ in order to rebuild your credit and get back on the right financial track after bankruptcy. One such option involves finding someone who trusts you enough to co-sign on a loan or a credit card.

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