The Virginia Verdict Review

Comprehensive and Informative Commentary on State and Federal Legal Matters

Tag Archives: Bankruptcy

Bankruptcy Law: Filing Chapter 13 Bankruptcy

NOTE: All of the policies and procedures addressed below are based on the standard practices of Westlake Legal Group and are not intended to be construed as anything other than such.

To begin with, it is important to understand that a Chapter 13 case follows the same initial process as a Chapter 7 case.  After the  initial consult,  a “means test” is applied in order to determine eligibility under Chapter 7. Once it is determined that you are not eligible for relief under Chapter 7, we will begin to prepare your application for relief under Chapter 13.

When filing under Chapter 13, we will typically propose to the Chapter 13 Trustee a payment plan that sends him/her your disposable income to be used to pay off your creditors. The payment plan cannot exceed your disposable income and the plan cannot exceed 60 payments (5 years). Unless your plan allows you to pay off all your debts in fewer than 60 payments, you should count on a 60 month plan. At the end of the plan term, the remaining debts (with a few exceptions) are eliminated, just as in a Chapter 7 case.  While the plan is in effect, you do not pay interest on most debts. You may also pay a portion of your legal fees through the plan

At the moment Westlake Legal Group files your Petition for relief under Chapter 13, legal and collection actions must stop. This “stay” applies to foreclosures, garnishments, repossessions, and any other lawsuit. The first payment of the plan is due no later than 30 days after filing. This payment is due even if the plan is not ultimately approved. Failure to make this payment will result in an automatic dismissal of your case.

One other important obligation, incurred as a result of being granted the “stay” upon filing, is that you must keep all of your regularly incurring debts current. These include house payments, car payments, and any other secured installment payment.

It is also important to realize that the Trustee will not send you a monthly reminder. It is up to you to make sure your payments are received by the Trustee on time.  In addition, the Bankruptcy Code requires that a payroll deduction order be entered so that your employer pays the Plan payment directly to the Chapter 13 Trustee. However, you are responsible to ensure the payment is made. If your employer fails to make the payment for some reason, your case can be dismissed.

It is important not to miss any payments to the Trustee. If you miss a payment, the Trustee cannot pay your creditors as called for by the Plan and the Trustee may be obligated to file papers with the Bankruptcy Court asking that your case be dismissed. If your case is dismissed, your creditors will be notified, and they may resume collection against you.  If there is a serious change in your circumstances that affects your ability to make payments under the plan, contact Westlake Legal Group immediately. Do not miss a payment. We will notify the Trustee. We will also review your status, and possibly seek to modify your plan.

Once the Petition and plan are filed, if the Trustee recommends approval of the plan, you will receive a Confirmation Order setting forth the duration of the plan, the amount of payment, and other obligations. If the Trustee does not initially approve the plan, or a creditor successfully objects to the plan, we have to file an amended plan or attend a hearing. It is imperative that you continue to make your plan payment even if there is an objection or a request to submit an amended plan.

After the plan is filed, as in a Chapter 7 case, the Trustee will conduct a hearing to verify the accuracy of your Petition and to determine the status of your assets and income. Creditors have 90 days from that hearing to file a proof of claim in order to receive some payment from the plan (governmental units, like the IRS, have 120 days). Usually within six months of filing, the Trustee’s office will send a report called “Notice of Intent to Pay Claims.” You will have 30 days to object to any amounts claimed in the report, otherwise the debt will be deemed valid and paid in the Chapter 13 case.

If the plan does not call for paying all debts in full, every year you will be required to provide signed copies of your Federal and States tax returns to the Trustee within 10 days of their filing. Westlake Legal Group will also assist you in determining the proper number of tax exemptions to take from your employer, as all tax refunds in excess of $250.00 must be paid to the Trustee as an additional payment for the benefit of your creditors.

Every six months, you will receive a report from the Chapter 13 Trustee’s office listing the payments received and to whom payments have been made during that period. This report should be reviewed to ensure consistency.  Approximately 6 to 8 months after filing, the Chapter 13 Trustee will conduct a short, half-hour meeting to review your case.

Information regarding your Chapter 13 filing and the specifics of its administration are available as matters of public record, and the financial details of your case will be disclosed to parties in interest.

When you are finished making all of the payments in the plan, as directed by the Confirmation Order, the closing procedure will begin. If you are paying less than 100% to your unsecured creditors, you must file all the appropriate tax returns in order for the case to be closed. After all required information and payments have been received, the Chapter 13 office will issue an order to stop your payroll deduction. Any overpayments will be refunded after your case has its final audit. If you pay 100% of your debt, you can pay your case off early. After all the requirements of your case have been satisfied, you will receive your discharge papers from the Court in approximately four to six weeks.

For more information about the Chapter 13 process, or to schedule a personal consultation, please feel free to contact Westlake Legal Group and we will be glad to meet with you.

Advertisements

Bankruptcy Law: Filing Chapter 7 Bankruptcy

When considering bankruptcy, it is imperative that one considers all of the options available and the unique, intricate aspects of each.  In this particular post, we will explore the characteristics of one of the most popular forms of bankruptcy–Chapter 7.  In particular, we will focus on the process through which ones files for Chapter 7 bankruptcy in Virginia.  Since I can only speak to what I know, all of the procedures outlined below are based off the practices adhered to here at Westlake Legal.

As you might have guessed, the bankruptcy process often begins in an attorney’s office.  If you feel you want to discuss your options for filing for bankruptcy relief in the Commonwealth, please feel free to schedule an appointment with our firm, Westlake Legal Group.  Regardless of which firm you chose though, be sure to bring a complete list of your assets and your current bills with you. Typically, you will be asked to fill out a questionnaire with regard to those assets and bills.  In our office, we will also ask you to authorize a credit check that will be ordered and sent to us.  The attorney will also provide you with certain required notices to help better inform you of your responsibilities down the line.

After we get your information, we will apply what is called the “means test.” This  test, which is based on income, will give a preliminary determination of your eligibility to apply for relief under Chapter 7. You are automatically eligible to wipe out your debts with a Chapter 7 bankruptcy if you are below the average income for your family size inVirginia.  As of April 19, 2010, the averages for Virginia are:

Family Size* One Person Two People Three People Four People Five People
INCOME $48,190  $64,890 $73,887 $85,633   $93,133

*Add $7500 for each person in excess of four

If your family income falls below those listed above, you are automatically entitled to relief under Chapter 7. If you exceed those limits, an additional analysis needs to be performed.

If your family income exceeds the average as identified above, you may still be eligible for a Chapter 7 filing. To determine that, Westlake Legal will evaluate your specific case. We will determine your “disposable income” after deducting certain expenses from your overall pay.

If your projected disposable income over the next five years is less than approximately $175 per month, you will likely be eligible for Chapter 7 relief. If you have more than approximately $175 disposable income per month, you may only be allowed to use Chapter 7 if you can demonstrate special circumstances, such as on-going medical situation. Otherwise, you may have to consider filing under Chapter 13.

Once we have determined that you are eligible for filing under Chapter 7, we will ask you to take an online credit counseling course. This is usually done in our office. Once completed, we will prepare the necessary paperwork, with your assistance, and file with the Bankruptcy Court.

Once we have filed, you will be required to take another online course, this one on financial management. This is also usually done in our office. This must be completed before you can receive a discharge.

Approximately 30 days after filing, the Trustee will conduct a hearing to verify the information placed in the Bankruptcy Petition and to ask questions about any equity in highly valued assets. After the Trustee’s hearing, the Trustee sends notice to creditors and gives them approximately 60 days to make inquiry and object to the discharge, if a reason exists. After the 60 days, assuming there are no objections, the Court enters a final Order of Discharge and the case is ended.

For more information on the Chapter 7 process, or if you would like to schedule a personal consultation, please feel free to contact us at any time.

We are a Debt Relief Agency.
We help people file for Bankruptcy Relief under the Bankruptcy Code.

 

Bankruptcy Law: Chapter 7 vs. Chapter 13

For anyone considering seeking bankruptcy relief, understanding the bankruptcy system is of utmost importance.  For this reason, we have created a number of short articles that briefly explain some of the most essential aspects of the bankruptcy process.  In this particular post, we will be discussing the difference between Chapter 7 and Chapter 13 bankruptcy.

The laws regarding bankruptcy are found in Title 11 of the United Stated Code. Each Chapter of the Title deals with certain parts of the bankruptcy process. For example, Chapter 1 provides general provisions and definitions as they apply to the bankruptcy process. Several chapters deal with specific relief for specific types of debtors. Chapter 11 provides the rules and law for the reorganization of large companies that want to keep operating. Most individual debtors are concerned with either Chapter 7 or Chapter 13.

Chapter 7 is the most common chapter used by individuals in debt. It is considered to be the quickest and least expensive way of obtaining relief. When filing under Chapter 7, most of your unsecured debts are discharged–meaning they are eliminated and cannot be collected.  Usually you cannot eliminate taxes, student loans, or child support. You also may not be able to eliminate some debts associated with a divorce. At Westlake Legal Group, we can analyze your debts and give you an accurate prediction of the likelihood of their discharge.

Chapter 13 is referred to as an adjustment of debt and is used when a debtor has regular income and can pay his or her living expenses, but cannot make all the payments on his or her regular, scheduled debts. Essentially, the debtor cannot make all his payments but can make some contribution to paying back his debt. Often people with higher incomes are required to initially file under Chapter 13. Under a Chapter 13 filing, the Court adopts a payment plan you can afford. The plan stops the accrual of interest on unsecured debt and can require payments for up to five years. If all the debt can be paid off sooner once interest is stopped, the plan may be for a shorter period.  One is eligible for Chapter 13 relief if his or her unsecured debts are below $360,475 and his or her secured debts are less than $1,081,400.

For more information regarding Chapter 7 or Chapter 13 bankruptcy, follow this link to a helpful site, or give us a call at Westlake Legal Group to set up an appointment.

Pursuant to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), please be advised that:

We are a Debt Relief Agency.
We help people file for Bankruptcy Relief under the Bankruptcy Code.