Gathering
Paperwork
To begin the process you must itemize your
current income sources; all major financial transactions for the last two years;
living expenses occurring monthly; all debts (secured and unsecured); and all property (all assets and possessions, not
just real estate). Collect your tax returns for the last two years, your car(s) titles,
the deeds to any real estate you own, and the all documents for loans you have.
Filing
Bankruptcy
Once this information has been gathered, on
your own or with the help of an attorney, determine which property you believe is exempt
from seizure based on the Virginia exemptions.
When you actually file, you or your attorney, need to file a two-page petition and some
other forms at your Virginia district bankruptcy court.
Together these forms are referred to as the schedules and portray your current financial
status and recent financial dealings (typically within the last two years). If your
creditors or judge feel or find out you are not entirely cooperative in your bankruptcy
filing, it could risk the outcome of your petition.
The cost for filing a Chapter 7 bankruptcy is $200.
This fee can not be waived although you may be able to pay it in installments. The fee for
filing a Chapter 13 bankruptcy is $185. This fee can not be waived.
Chapter
13 Requirements
If you file for Chapter 13 bankruptcy, a
proposed repayment plan must also be presented. After practical monthly expenses have been
paid, how much money will you have left over to put toward your outstanding bills? And how
will this money be divvied up among those you owe? Priority claims (such as taxes and back
child support) must be paid in full; unsecured debts (like credit card debt and medical
bills) are usually paid in part. Depending upon the judgments of those involved with your
case, unsecured debts can be paid off for as little as 10 cents on the dollar.
In addition to the general requirements
listed above, the repayment plan must pass three tests:
If you have filed Chapter 13, you must
begin making your plan payments. Generally these payments will be withdrawn directly from
your wages and you or your attorney should arrange with the court for these payments to be
deducted from your wages.
Automatic
Stay
Once you have filed your paperwork with the
bankruptcy court, an automatic stay immediately goes into effect. This provision prevents
creditors from making direct contact with you or staking a claim on any of your property
from the day of filing forward. This will stop any foreclosure proceedings. If you have
filed Chapter 13, you must begin making your plan payments. Generally these payments will
be withdrawn directly from your wages and you or your attorney should arrange for these
payments to be deducted from your wages.
Bankruptcy
Trustee
Upon filing, the court will assume legal
control of your debts and property not covered by your Virginia exemptions. A trustee will be appointed to your case by the
court. The job of the trustee is to see that your creditors are paid as much as possible.
This person will thoroughly review your paperwork, particularly the assets you have in
your possession and the exemptions you wish to claim, and can challenge any element of
your case.
341 Meeting of Creditors
Approximately a month after filing, the
trustee will call a first meeting of creditors, which the debtor must attend. This
proceeding is also referred to as the § 341 meeting, named after the corresponding
section of the bankruptcy code. Creditors rarely attend a Chapter 7 bankruptcy meeting;
one or two creditors may attend a Chapter 13 meeting, especially if there is a question as
to the legitimacy of some aspect of the plan. Objections are typically resolved by
negotiation between the debtor or the debtor's counsel and the creditor. If a compromise
can not be reached, a judge will intervene.
The meeting of creditors typically lasts
about five minutes. You will receive notice of the location of the meeting but you may
contact the court to confirm the address and time. (see Virginia
Bankruptcy Court Directory) Most Chapter 7 filings involve no non-exempt assets,
however, if you filed for Chapter 7 and do have non-exempt assets, you will have to turn
over non-exempt property (or its fair market value in cash) to the trustee after the
meeting.The trustee will sell this property and distribute the proceeds to your creditors.
If the property isn't worth a great deal or would be hard to sell, the trustee may decide
to abandon the property (and return it to you). Trustees and creditors have 60 days to
challenge the debtor's right to a discharge. If there are no challenges, you will receive
a notice from the court that your dischargeable debts have been discharged within roughly
three to six months.
Chapter
13 Plan Confirmation
If you filed a Chapter 13 plan will attend
a hearing before a bankruptcy judge to confirm or deny the repayment plan. If confirmed
and you make good on it, the balance (if any) on the dischargeable debts will be
eliminated at the end of your term.