When personal debt gets out of control and the residents of Virginia feel the pressure to make payments they can no longer afford, bankruptcy is a valuable option. Because there are several types of bankruptcy and each type changes how much you pay, how your debts are discharged and how your credit is affected, it is important to understand the benefits of each type.
According to Consumer Affairs, Chapter 7 bankruptcy is what most people think of when they think of bankruptcy. It is also known as liquidation, as all of your property is sold to pay off as much of your existing debt and financial obligations as possible. This property could be homes, vehicles or any other type of liquid asset that can quickly be sold. However, there are exemptions that may apply that allow you to keep some of your assets.
The United States Courts requires that to file for Chapter 7, the debtor must be a corporation, partnership, business entity or an individual. The collecting and selling of your assets is done by a bankruptcy trustee.
One of the larges benefits of Chapter 7 bankruptcy is that there is no repayment. Your debt is cleared once the process is over, which is between three to six months on average. Another benefit is that there is no debt maximum or minimum when it comes to filing Chapter 7 bankruptcy. The major requirement is that your income must be lower than or equal to the state’s median income.
Under Chapter 7 bankruptcy, you still have some obligations to meet. These include tax debt, child support, student loans and any debt that was caused by fraudulent dealings. This general information is provided for educational purposes but should not be interpreted as legal advice.