Chapter 7 Bankruptcy: Pros, Cons, and Making the Right Choice

Chapter 7 Bankruptcy: Pros, Cons, and Making the Right Choice
Chapter 7 Bankruptcy: Pros, Cons, and Making the Right Choice
Chapter 7 Bankruptcy: Pros, Cons, and Making the Right Choice

Filing for bankruptcy is often seen as a last resort. But sometimes, it’s the most pragmatic way to get back on your feet financially. Chapter 7 bankruptcy, in particular, has pros and cons that need to be carefully weighed before taking the plunge. Let’s review what Chapter 7 bankruptcy includes and how it could either be a lifeline or a burden, depending on your situation.

How Bankruptcy Has Changed Over the Years

Way back, bankruptcy used to be pretty much a one-way ticket to social and financial ruin. It was viewed more as a punishment for people who couldn’t manage their money rather than a tool for financial recovery. Debtors’ prisons, where people were thrown into jail for owing money, were a grim reality.

Fast forward to today, and bankruptcy has taken on a more rehabilitative role. The modern bankruptcy system aims to help people reset their financial status while providing them with the tools to manage their money more responsibly in the future. Chapter 7 bankruptcy, for example, allows you to discharge most of your debts, giving you a clean slate of sorts.

The Pros of Chapter 7 Bankruptcy

No Repossessions or Collections

One of the immediate benefits of filing for Chapter 7 is the automatic stay that goes into effect. This stops creditors from taking action to collect debts, repossess property, or garnish your wages. It gives you breathing room to sort out your finances.

Debt Relief

Chapter 7 lets you discharge unsecured debts like credit card balances, medical bills, and personal loans. This means you’re not required to pay them back. Basically, you get a reset button for much of your debt.

Cheap and Fast Processing

Chapter 7 is generally less expensive and quicker than other forms of bankruptcy. While you’ll need to pay for a bankruptcy attorney, the actual filing fees are relatively low:

  • $245 case filing fee
  • $75 miscellaneous administrative fee
  • $15 trustee surcharge

Compared to the tens of thousands of dollars in debt you might have, these fees can seem minuscule. Plus, a Chapter 7 case can be completed in a few months, letting you get back to your life faster.

Flexibility for Credit

After you’ve successfully completed a Chapter 7 bankruptcy, you’re technically eligible to start building credit again. While the bankruptcy will stay on your credit report for up to 10 years, you’re not barred from taking out new credit. In fact, many people find that they can get approved for secured credit cards and even car loans not long after their bankruptcy is finalized.

Cons of Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy does offer several advantages, but it’s not perfect. There are some substantial drawbacks that you need to consider carefully before taking this route.

Loss of Property

One major con of Chapter 7 is the potential loss of property. In this type of bankruptcy, non-exempt assets are liquidated, meaning they’re sold off to pay back your creditors. You’ll get to keep some basics, like your primary residence and car up to a certain value, but anything above and beyond those exemptions can be taken and sold. So if you have sentimental or high-value items that aren’t covered under state exemptions, you could lose them.

Credit Effects

Yes, Chapter 7 bankruptcy offers a fresh start, but it comes at a cost to your credit score. Your credit report will show the bankruptcy for up to 10 years, which can make it difficult to secure loans, credit cards, or even some types of employment. It’s a long road to rebuild your credit score, and bankruptcy will be a significant hurdle for a good chunk of that time.

Not All Debts Will be Discharged

Some debts are immune to Chapter 7. For example, student loans, child support, and most types of tax debt won’t be discharged. That means you’ll still be on the hook for these even after you’ve gone through the bankruptcy process. If a substantial portion of your debt is of this type, Chapter 7 might not offer the relief you’re seeking.

Cost Potential

While filing for Chapter 7 bankruptcy can seem like a budget-friendly option, there are some costs involved. You’ve got a $245 federal case fee, along with other administrative charges. These fees can be paid in up to four installments, with the last one due 120 days after filing the petition. If your income is below 150% of the federal poverty guidelines, you may be able to get these fees waived.

There’s also the means test if you’re earning more than a specific monthly limit. If your income exceeds the median salary for your state, you’ll have to go through this test to prove that you genuinely need to file for Chapter 7. Fail this test, and you could be converted to a Chapter 13 bankruptcy or even have your case dismissed, wasting time and money.

Filing Chapter 7 Bankruptcy for a Fresh Start and Debt Relief

If you’ve weighed the pros and cons and decided that Chapter 7 is for you, it can offer a fresh start and relief from many types of debt. While the drawbacks are real, the benefits can be life-changing, allowing you to move forward without the burden of insurmountable debt.

Contact the Law Offices of Robert S. Brandt to Request a Consultation and Learn About Your Options for Chapter 7 Bankruptcy

If you’re on the fence about filing for Chapter 7 bankruptcy, or you need professional advice tailored to your specific situation, consider reaching out to legal experts. Contact The Law Offices of Robert S. Brandt to request a consultationto go over your options and help you make an informed decision about whether Chapter 7 bankruptcy is the right path for you.

A Guide to Chapter 7 vs. Chapter 13 Bankruptcy and Keeping Your Business Alive

A Guide to Chapter 7 vs. Chapter 13
A Guide to Chapter 7 vs. Chapter 13
A Guide to Chapter 7 vs. Chapter 13

The topic of bankruptcy often brings up images of failure and the end of a dream. But what if we flipped the script? Could bankruptcy actually be a way to save a business and provide a second chance at success? It sounds counterintuitive, but the truth is, declaring bankruptcy might be a strategic move that can help you keep your business afloat. Let’s take a look at how bankruptcy can serve as a survival strategy for small businesses and what you need to consider before taking that route with a bankruptcy attorney in Virginia.

Bankruptcy As a Survival Strategy for Small Businesses

When you think of bankruptcy, you probably think of it as a last resort. That’s understandable. But for small businesses, bankruptcy can actually be a way to reorganize debts, gain some breathing room, and continue operations. Declaring bankruptcy can offer you the time to restructure your business plan, renegotiate contracts, and resolve financial issues without the constant pressure of creditors breathing down your neck.

Chapter 13: A Brief Overview

Chapter 13 bankruptcy is a common choice for small business owners. It allows you to create a repayment plan to pay back your debts over a period of time, usually 3 to 5 years. The benefit here is that your business can continue running while you’re making payments. This means you can still generate income, keep your employees, and possibly even grow during this period.

Considerations for Declaring Chapter 13 Bankruptcy for Your Business


Not every business can file for Chapter 13. It’s mainly for sole proprietors, as corporations and partnerships don’t usually qualify. Also, there are debt limits

Costs and Legal Procedures

Filing for bankruptcy isn’t free or easy. There are court fees, attorney fees, and the time you’ll spend in financial and legal meetings. Make sure you weigh these against the potential benefits.


In order to qualify for Chapter 13, your business needs to be generating enough income to meet the repayment requirements. Simply put, if you can’t demonstrate that your business can be profitable in the near future, then Chapter 13 may not be the right option. You’ll need to show that you can cover both your current operational costs and your repayment plan.

Personal Liability for Business Debts

For sole proprietors, business finances often mix with personal finances. Chapter 13 will likely involve your personal assets because, legally, you and your business are considered the same entity. This means your personal credit score will be affected, and your personal assets might be at risk. Make sure you’re willing to accept these terms.

Realistic Decision-Making

Look, no one wants to declare bankruptcy. But sometimes it’s the best option. The key is to make a realistic assessment of your business. Can it survive and thrive after the restructuring? Are you willing to adapt your business model or pivot entirely? Make sure to consult with financial and legal advisors to get a clear picture of what your business landscape could look like post-bankruptcy.

Business Assets vs. Liabilities

One of the first steps in the process is taking stock of your assets and liabilities. This is not just an accounting exercise; it will help you and the court determine whether your business is salvageable. High-value assets might need to be sold to satisfy debts. On the flip side, identifying your most burdensome liabilities might show you where restructuring could make the most significant impact.

Why Chapter 7 Usually Leads to Closed Businesses

Chapter 7 bankruptcy is commonly referred to as “liquidation” bankruptcy. Unlike Chapter 13 bankruptcy, which allows for reorganization and repayment of debts, Chapter 7 involves selling off your assets to pay off creditors. For this reason, it’s generally not the best option for businesses that want to continue operations. Once assets are sold off, there may be nothing left to continue the business, effectively leading to its closure. If you’re hoping to keep your business open, Chapter 7 usually isn’t the way to go.

Can Creditors Force a Business Into Involuntary Bankruptcy?

The short answer is yes, creditors can push a business into involuntary bankruptcy, but there are conditions. Typically, it’s a move creditors consider if they believe it’s the only way to get some or all of their money back. However, forcing a business into bankruptcy requires a legal process and usually the agreement of multiple creditors. Involuntary bankruptcy can be filed under Chapter 7 or Chapter 11, but not Chapter 13. It’s rare but possible, so if you’re in significant debt and unable to make any payments, be aware of this risk.

File Chapter 7 Bankruptcy and Continue a Sole Proprietorship Service Business

In specific cases, a sole proprietor could file for Chapter 7 and still continue operating their service-based business. This usually works for businesses that don’t have significant assets to liquidate and are primarily based on the individual’s skills or services, such as consulting or freelance work. The business itself doesn’t continue in the same legal form, but the individual can often start anew after the bankruptcy process is over. But tread carefully; the details are intricate and involve legal nuances best navigated with professional advice.

Chapter 7 vs. Chapter 13 Bankruptcy

When comparing Chapter 7 and Chapter 13, the main difference is liquidation vs. reorganization. Chapter 7 wipes out most of your debts but at the cost of selling off assets and usually closing the business. Chapter 13, on the other hand, allows you to reorganize your debts and pay them off over time. If you’re looking to keep your business open, Chapter 13 is generally the more suitable option.

Keep a Business Open by Reorganizing Debts Under Chapter 13 Bankruptcy

Chapter 13 offers the advantage of letting you keep your assets and continue running your business while you repay debts. This can be particularly helpful for businesses hit by temporary setbacks but have a solid foundation for future success. You get a chance to renegotiate contracts, restructure debts, and maybe even reduce some of your obligations. If done right, Chapter 13 can serve as a lifesaver, allowing your business to emerge stronger and more resilient.

Why You Need a Bankruptcy Attorney in Virginia for Your Business

Specific rules and regulations govern bankruptcy, and these can differ from state to state. In Virginia, for example, the state has its own set of exemptions and laws that you’ll need to consider. An experienced bankruptcy attorney can guide you through the complex legal landscape, helping you make the best choices for your unique situation. From filing paperwork correctly to representing you in court, having an experienced attorney can make the bankruptcy process less daunting and more efficient.

Contact the Law Offices of Robert S. Brandt to Request a Consultation

When you’re facing the complex world of bankruptcy, it’s essential to have skilled legal guidance. The Law Offices of Robert S. Brandt specializes in business bankruptcy cases in Virginia and can help you navigate this challenging period. With expertise in both Chapter 7 and Chapter 13, we offer consultations to discuss your options and create a strategy for your business. Don’t go through this process alone; reach out to request a consultation and take the first step toward resolving your financial difficulties.

Can You Keep Your Car When Filing for Bankruptcy?

When facing bankruptcy, one of the most pressing concerns for many individuals is the fate of their personal assets, specifically their vehicles. A car is not just a symbol of independence; it’s also a lifeline that enables people to commute to work, take their kids to school, or even make a living. But can you keep your car during bankruptcy? The answer is not a simple yes or no, as it largely depends on the specifics of your financial situation and the type of bankruptcy filed. Here a Chapter 7 bankruptcy lawyer breaks down what you need to know.

What Happens to Cars in Bankruptcy

In the realm of bankruptcy, cars are considered assets and therefore can be affected by the proceedings. In Chapter 7 bankruptcy, non-exempt assets are liquidated to pay off creditors. However, each state has its own exemption laws that may allow you to keep your car. If the equity in your car is less than the allowable exemption, you can typically keep it.

Chapter 13 bankruptcy works differently. Instead of liquidating assets, you’re put on a payment plan to repay some or all of your debts over time. In this case, you’ll likely be able to keep your car, as long as you continue making payments.

How Reaffirmations Work

Reaffirmation is a legal procedure in which you agree to continue paying a secured debt, like a car loan, even though you’re going through bankruptcy. By signing a reaffirmation agreement, you’re essentially promising your lender that you’ll honor the original contract. This allows you to keep your car during and after bankruptcy. However, it’s important to consult with a bankruptcy attorney before entering into such an agreement.

Is it a Good Idea to Keep Your Car?

This question is subjective and depends on your unique situation. If your car loan has a high interest rate, or if the car’s value is less than what you owe, it may not be wise to reaffirm the debt. However, if your car is essential for your livelihood and you can afford the payments, it might make sense to keep it. It’s crucial to weigh the pros and cons and potentially seek professional advice.


Redemption is another option for keeping your car in bankruptcy. In a redemption, you pay the lender the replacement value of the car in a lump sum. This is often less than the total amount you owe, potentially saving you money in the long run. However, redemptions require you to have the necessary funds available, which might be challenging when facing bankruptcy.

Cross Collateralization from Credit Unions

If you have a car loan with a credit union, you may encounter a situation known as cross-collateralization. This is when the credit union uses collateral from one loan (like a car loan) to secure another loan. In a bankruptcy scenario, this can complicate matters, as discharging one debt might still leave you with the obligation to repay the car loan due to the cross-collateralization clause.

Learn About Your Options and Get an Initial Consultation with The Law Offices of Robert S. Brandt, Chapter 7 Bankruptcy LawyerBankruptcy is a complex process filled with critical decisions that can dramatically impact your financial future. Understanding your options and rights concerning your car is a crucial part of navigating this challenging time. The Law Offices of Robert S. Brandt can provide the guidance and representation you need during this difficult time. With a comprehensive understanding of the bankruptcy process and a compassionate approach, we are prepared to help you explore your options and make the best decision for your unique situation. Don’t navigate bankruptcy alone. Reach out for an initial consultation with a Chapter 7 bankruptcy lawyer today

Debunking Bankruptcy Misconceptions in Virginia 

Bankruptcy is often surrounded by a cloud of myths and misconceptions that can make it seem like an intimidating or shameful option for those struggling with financial difficulties. These misconceptions can prevent individuals from making informed decisions about their financial futures. Let’s debunk some of the most common misconceptions about bankruptcy from a professional bankruptcy lawyer in Virginia.

That It is a Personal Failure to File for Bankruptcy

One of the most prevalent misconceptions about bankruptcy is that it’s a sign of personal failure. This could not be further from the truth. Bankruptcy is a legal process designed to help individuals and businesses manage insurmountable debt. It is not an indication of personal worth, morality, or ability. Rather, it is a tool to utilize when financial circumstances have become unmanageable. Many people face financial hardship due to unforeseen circumstances such as medical emergencies, job loss, or economic downturns.

You Will Lose Everything

In reality, the Bankruptcy Code provides for exemptions that protect certain types of property. In Virginia, these exemptions include certain amounts of equity in a home, a vehicle, personal belongings, and other assets. The goal of bankruptcy is to give you a fresh start, not leave you destitute.

Bankruptcy Will Apply to All Debts

It’s also commonly believed that bankruptcy will wipe out all debts. While bankruptcy can discharge many types of debts, there are some that are typically not dischargeable, such as student loans, child support, alimony, and some tax debts. It’s crucial to understand which debts can and cannot be discharged before deciding to file for bankruptcy.

Your Financial Future Will be Ruined

Many people fear that filing for bankruptcy will ruin their financial future. While it’s true that bankruptcy will have a significant impact on your credit score initially, it doesn’t mean permanent financial doom. Over time, with responsible financial management, your credit score can improve. Bankruptcy can often provide the financial reset needed to start building a healthier financial future.

It’s Better to Spend Years Trying to Pay Off Debts Versus Filing for Bankruptcy

It is not always the case that you should try to pay off your debts instead of filing for bankruptcy. Sometimes, the amount of debt is so overwhelming that it would take a lifetime to pay off, and the constant pressure from debt can lead to significant stress and health issues. Bankruptcy can provide immediate relief and a path to financial recovery.

How The Law Offices of Robert S. Brandt Help Resolves Your Bankruptcy

At the Law Offices of Robert S. Brandt, we’re dedicated to helping you navigate the complexities of bankruptcy. Our experienced team will guide you through the process, explain your options, and help you understand the implications of each decision. We’ll work with you to develop a plan that suits your unique circumstances and aims to put you on a path to financial stability.

Contact the Law Offices of Robert S. Brandt for an Initial Consultation

If you’re considering bankruptcy, contact the Law Offices of Robert S. Brandt for an initial consultation. Our bankruptcy lawyers in Fairfax, VA, Alexandria, and Leesburg, are committed to providing you with the information and guidance you need to make the best decision for your financial future. Don’t let misconceptions keep you from exploring all your options. Reach out to us today to start your journey towards financial freedom with the help of a bankruptcy lawyer in Virginia.

Can a Loan Modification Stop Foreclosure in Virginia?

In Virginia, a homeowner who is behind on their mortgage payments may face the threat of foreclosure. Foreclosure is the process by which a lender takes possession of a property due to non-payment of a mortgage. However, a loan modification can be a way to stop foreclosure and allow the homeowner to keep their home. Let’s explore whether a loan modification can stop a foreclosure in Virginia and the Virginia foreclosure laws you should be aware of.

Loan Modification Explained

A loan modification is a change made to the terms of an existing mortgage by the lender. It is intended to help homeowners who are struggling to make their mortgage payments by making their payments more affordable. The lender may modify the loan by lowering the interest rate, extending the repayment term, or reducing the principal balance owed. The goal of a loan modification is to reduce the monthly mortgage payment to a level that the homeowner can afford.

Advantages and Disadvantages of Loan Modification

There are several advantages to obtaining a loan modification. Most importantly, it can stop a foreclosure. If a homeowner is behind on their mortgage payments and facing foreclosure, obtaining a loan modification can halt the foreclosure process. Second, a loan modification can make the monthly mortgage payment more affordable, allowing the homeowner to stay in their home. It can also help the homeowner avoid the negative impact of foreclosure on their credit score.

However, there are also some disadvantages to obtaining a loan modification. Firstly, the process can be time-consuming and complex. It may take several months to complete the loan modification process, and there is no guarantee that the lender will approve the modification. Secondly, a loan modification may not necessarily reduce the total amount owed on the mortgage, and may even increase the overall cost of the loan. Thirdly, a loan modification may result in a longer repayment term, which means that the homeowner will be paying off the mortgage for a longer period of time.

Mortgage Loan Modification Process and Procedure

The mortgage loan modification process and procedure may vary depending on the lender and the homeowner’s specific circumstances. However, there are some general steps that are typically involved in the loan modification process. Firstly, the homeowner will need to submit an application for a loan modification to their lender.

The application will typically require documentation of the homeowner’s income, expenses, and financial hardship. Second, the lender will review the application and may request additional documentation or information. Next, the lender will evaluate the homeowner’s financial situation and may propose a loan modification with new terms and conditions. Finally, if the homeowner accepts the loan modification, they will need to sign new loan documents and make payments according to the new terms.

How You Can Get a Loan Modification

If you are a homeowner in Virginia who is struggling to make your mortgage payments and facing the threat of foreclosure, you may be eligible for a loan modification, but there are several steps to go through first. To get a loan modification, you will need to follow the steps outlined by your lender and provide documentation of your financial hardship. It is also important to seek professional advice from a foreclosure attorney who can guide you through the loan modification process and help you understand your legal rights and options.

What Qualifies as Financial Hardship for an Effective Loan Modification Request

To qualify for a loan modification, you must demonstrate to your lender that you are experiencing financial hardship. Financial hardship refers to a situation where you are unable to make your monthly mortgage payments due to a significant and long-term change in your financial circumstances.

Some common examples of financial hardship that may qualify for a loan modification include:

● Loss of employment or reduction in income
● Illness or disability that results in a loss of income or increased expenses
● Divorce or separation that results in a loss of income or increased expenses
● Unexpected and significant expenses, such as medical bills or home repairs
● Death of a spouse or co-borrower resulting in a loss of income

It is important to note that not all financial hardship situations will automatically qualify for a loan modification. Each lender has their own criteria for evaluating hardship cases. However, if you can demonstrate that your financial hardship is significant and long-term, you may have a better chance of being approved for a loan modification. It is important to consult with a foreclosure attorney who can help you understand the lender’s requirements and increase your chances of success.

Frequently Asked Questions

Q: What is foreclosure?

A: Foreclosure is the legal process by which a lender takes possession of a property due to non-payment of a mortgage.

Q: Can a loan modification stop foreclosure?

A: Yes, a loan modification can be an effective way to stop the foreclosure by making the monthly mortgage payment more affordable.

Q: What are the advantages of a loan modification?

A: The advantages of a loan modification include stopping foreclosure, making the monthly mortgage payment more affordable, and avoiding the negative impact of foreclosure on credit score.

Get in Touch With the Law Offices of Robert S. Brandt to Learn More About Foreclosure Laws and Schedule a Consultation

If you are facing the threat of foreclosure in Virginia, it is important to understand your legal rights and options. The Law Offices of Robert S. Brandt can help you navigate the complex foreclosure laws and procedures in Virginia and provide guidance on how to stop foreclosure and keep your home. I offer a free consultation to discuss your situation and determine the best course of action. Contact me today to schedule a consultation and learn more about how I can help you.