Chapter 7 bankruptcy is one of the two most common types of bankruptcy filed by consumers in Virginia Beach. In most cases, the entire chapter 7 bankruptcy process only takes about 6 months from start to finish, but debtors are protected from creditors at the moment the case is filed. Once your chapter 7 bankruptcy case has been filed by our lawyers, no creditor can attempt to collect any debt from you. All collection efforts must stop including phone calls and garnishments.
In a chapter 7 liquidation case, sometimes referred to as “straight bankruptcy,” a trustee is appointed to collect and liquidate the debtor’s nonexempt assets (see below for an explanation of “nonexempt assets”) and to pay the proceeds to creditors in the order set forth in the Bankruptcy Code. Most chapter 7 cases are “no asset” cases. This means that the debtor does not have sufficient nonexempt assets or sufficient income to make any distribution to unsecured creditors. Unsecured creditors are those who do not have a valid lien on collateral like credit cards and medical bills included in bankruptcy.
Creditors with liens on property are secured creditors and must be paid by the debtor outside of the bankruptcy process in a chapter 7 bankruptcy. In many cases, a debtor will reaffirm debt that is secured. Reaffirmation agreements can be signed by debtors to allow them to continue to make payments on secured property like cars, furniture and jewelry when the file chapter 7 bankruptcy. Before reaffirming on any debt in chapter 7 bankruptcy, it is important to understand how to rescind a reaffirmation agreement.
Virginia Beach residents filing bankruptcy are able to protect their property under the exemption laws of Virginia. Our lawyers are experts in Virginia’s complicated exemption laws and can protect most, if not all, of a debtor’s property in a chapter 7. Protection of property through the application of Virginia’s exemption laws is a key factor in determining whether or not to file a chapter 7 case. In cases where property cannot be protected because the value of the property exceeds the amount available under Virginia’s exemption laws, chapter 13 bankruptcy may be an option.
Learn more about the chapter 7 bankruptcy means test.