Filing For Chapter 13 In Virginia

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An individual in the state of Virgina wanting to have a fresh start with his finances can opt to file for a Chapter 13 bankruptcy proceeding.  Chapter 13 is designed for individuals who have run out of options in terms of paying creditors.

Virginia Bankruptcy Filings

Filing for Chapter 13 in Virginia starts with a would-be debtor filling out a set of forms detailing his or her income, expenses, property and obligations (debts). After completing these, a debtor files it in the nearest bankruptcy court. Simultaneously, the debtor also files with the court a viable payment plan, outlining how the debtor intends to manage his or her debts over a proposed payment period.

Along with these requisites, the debtor must also file with the court copies of his or her income tax return for the previous year, and proof that income tax returns for the preceding four years have been filed with the IRS. The debtor will also need to accomplish a certificate attesting that he or she has had credit counseling undertaken by an agency accredited by the U.S. Trustee.

How Chapter 13 works

Under the terms of a Chapter 13 bankruptcy plan, a debtor makes payments to the bankruptcy trustee – usually on a monthly basis. The bankruptcy trustee is appointed by the applicable bankruptcy court to supervise and oversee a debtor’s Chapter 13 case. In turn, the trustee (i) pays the debtor’s creditors, and (ii) earns a given commission on the amounts collected under the terms of the plan. A debtor is required to make timely payments, so that the terms of the plan are fully carried out, and in order for the bankruptcy court to discharge the debtor’s remaining debts.

Debts belong to different categories, and creditors are paid according to how much the debt is categorized. For instance, administrative claims like the trustee’s commission, attorney’s fees and the plan filing fee is paid 100%. Priority debts like tax debts, child support and alimony arrears, wages and salaries are also paid in full. If a debtor wants to hold on to his or her house, mortgage defaults are fully paid. Car payment arrears also fall under this category. Other secured (or collateralized) debts are paid 100%. Unsecured debts are paid 0% - 100% depending on the aggregate value of the debtor’s exempt property, the debtor’s disposable monthly income intended for the settlement of debts, and how long the debtor’s plan will last.

Seek Legal Advice

A debtor who is considering filing for Chapter 13 bankruptcy in Virginia should beforehand get legal advice and consult a bankruptcy lawyer. A lawyer will help a debtor separate myths from facts, and will help to ease the stress a debtor is undergoing. Filing for Chapter 13 bankruptcy leaves scars on a debtor’s credit rating. Retaining a good bankruptcy attorney will be the best move because these types of lawyers can give a debtor advice on how to improve credit rating after a bankruptcy filing. A good bankruptcy lawyer can also guide a debtor on how to achieve a more successful financial future.