How to Qualify for Filing Chapter 7 Bankruptcy in Virginia

Filing Chapter 7 bankruptcy isn’t something you want to do lightly. There are a number of steps you need to take before filing, and you must first determine whether you qualify for filing Chapter 7. This is done through a means test, among other steps. Here’s how to know whether you qualify for filing Chapter 7 and how an experienced lawyer in Virginia can help you through this process.

The Virginia Bankruptcy Means Test

To qualify for Chapter 7 bankruptcy in Virginia, you must meet certain financial eligibility requirements. The most important of these requirements is that you must have enough income to cover your monthly expenses. If you cannot afford to pay your bills, you will not be able to file for bankruptcy in Virginia.

This means test will determine whether you are able to repay your debts in a reasonable amount of time, based on your income. If your income falls below the Virginia median for your current household size, you will be exempt from the means test, and qualify for filing Chapter y.

The Means Test Exemptions

There are a number of factors that can exempt you from the Virginia Bankruptcy Means Test. The first is if your debts are not primarily consumer debts, you are exempt. You don’t need to take the means test if you are a disabled veteran and have incurred debt mostly during your active duty or while performing activities in the service of homeland defense.

The Virginia Median Income

If you do not qualify for the Virginia Bankruptcy Means Test, your income is below the median income for your household size. This is determined by your average monthly income calculated over the past six calendar months. If your income has declined over the past six months, but you are over the limit, it’s possible to wait another month or so for your income to move below the Virginia median. The final step is to multiply your average monthly income by 12 for the test. Based on your household size, these are the median Virginia incomes:

1 – $51,817.00

2 – $65,510.00

3 – $75,774.00

4 – $90,945.00

5 – $99,045.00

6  – $107,145.00

7 – $115,245.00

8 – $123,345.00

9 – $131,445.00

10 – $139,545.00

The Means Test

To complete the means test, you must calculate income and expenses, and subtract all allowed expenses for Virginia from the total income amount. This will be the income amount under bankruptcy available to pay unsecured creditors.

Filing Chapter 7 With the Help of The Law Office of Robert S. Brandt

While you may be able to file Chapter 7 bankruptcy, it’s not always recommended to do so. The Law Office of Robert S. Brandt can help you understand your options and determine whether bankruptcy is the best option for you. If you qualify, our experienced lawyers can guide you through the bankruptcy process and help you to emerge from it with your finances in better shape. Contact us today to request a consultation.

The Complete Guide to the Basics of Chapter 7 Bankruptcy

Declaring bankruptcy is never easy, but it is an important step in restoring your financial health. This guide will teach you the basics of bankruptcy, including how to file, what to expect, and how your bankruptcy Chapter 7 lawyer can help get things back on track if you are struggling financially.

The Alternative to Chapter 7

Chapter 7 bankruptcy is the most common form of bankruptcy, but it is not the only option. There are several other options but the most popular is Chapter 13 bankruptcy

An Overview of Chapter 13

Individual debtors who have a regular, steady income could be eligible to file under Chapter 13 of the bankruptcy code. Chapter 13 bankruptcy is a three-part process. In the first step, you must identify all of your debts, including current and past due bills, credit card balances, and student loans.

In the second step, you must propose a plan of repayment to all of your creditors. This plan must be realistic and should list all of the money you can afford to pay back each month.

The final step is a confirmation hearing where a bankruptcy judge will decide if your plan is fair and reasonable. If it is approved, you will have to start repaying your creditors according to the terms of your plan.

Background for Your Assets and Case

The background of your case will consist of the trustee gathering all of the non-exempt assets and using proceeds from the sale of those assets to repay creditors. Of course, when you file a petition under Chapter 7 there is a risk of losing property, and this part of the process will handle that aspect.

Doing background on your case should be the domain of an experienced bankruptcy Chapter 7 lawyer in Virginia. Let’s say you have a good credit history, you have never missed a payment on a debt, and you have never filed for bankruptcy before. In Chapter 7, you will likely have to file Official Public Records (OPR) that disclose this information to your creditors, and you may not be able to keep all your property. You should discuss your case with a Chapter 7 lawyer in Virginia to learn more.

Chapter 7 Eligibility Requirements

In order to file for bankruptcy in Virginia, you must meet the following requirements:

• You must be a U.S. citizen or a national of the United States.

• You must have a valid Virginia driver’s license.

• You must be at least 18 years old.

• You must have a valid Virginia address.

• You must have a steady income.

• You must not be in bankruptcy or under any order of relief from a bankruptcy court.

How Chapter 7 Bankruptcy Works

Chapter 7 bankruptcy is a form of bankruptcy in which a person’s debts are eliminated through a court-approved plan. The process of filing for Chapter 7 bankruptcy is similar to filing for chapter 13 bankruptcy.

To file for chapter 7 bankruptcy, a person must meet specific requirements, including being able to prove that they can no longer meet their financial obligations. After filing, the person will have a hearing to determine if their case should be moved to chapter 7 bankruptcy.

If the case is moved to bankruptcy, the person’s assets will be distributed among their creditors. This means that creditors will receive a portion of the debtor’s property, depending on the amount of the debt. Creditors who are owed less will receive less, and creditors who are owed more will receive more.

If the case is not moved to chapter 7 bankruptcy, the person’s debts will still be eliminated, but the process will take longer, and the person’s property may not be distributed among creditors. The courts will charge case filing fees, administrative fees, and a trustee surcharge, so you should also be prepared for that. However, if your income is lower than 150% of the poverty level, and you can’t pay the fees, the court could decide to waive those fees.

Debtors need to provide information to complete their Official Bankruptcy Forms in the petition:

  • Sources, amounts, and payment frequency for income.
  • All the property and living expenses in their current financial situation.
  • A comprehensive list of the creditors and their claims.

When you file for bankruptcy in Virginia, the court will appoint a case trustee to manage your case. The case trustee will:

  • Collect all of your income and assets.
  • Pay your creditors.
  • Make all necessary court appearances.
  • File any required documents.

What is the Role of a Case Trustee?

Once your case is filed, the U.S. trustee will appoint an impartial case trustee for the process of administering and liquidating the nonexempt assets. This process can be complex and time-consuming, and the case trustee will need the help of a bankruptcy lawyer in Virginia.

Once the case begins, this creates an “estate”. This becomes the temporary legal owner of all your nonexempt assets, and the trustee will liquidate these assets to pay your creditors.

The Chapter 7 Discharge Process

When your case is completed, the case trustee will file a discharge petition with the bankruptcy court. This petition will ask the court to discharge (discharge) your debts. The court will decide whether to discharge your debts and if so, will schedule a hearing to determine the amount of your discharge.

Get Strong Legal Representation from a Bankruptcy Chapter 7 Lawyer Like the Law Offices of Robert S. Brandt

Declaring bankruptcy comes with a web of intricacies and consequences that can be hard to understand on your own. That’s where a bankruptcy Chapter 7 lawyer like the Law Offices of Robert S. Brandt can help. Our team of experienced lawyers will walk you through the entire process, from filing for bankruptcy to receiving your discharge. We will fight for the best possible outcome for your case, and we will always remain on your side throughout the entire process. Contact us today to learn more about our services and schedule your initial consultation.

Motion for Relief from the Automatic Stay&Chapter 7 bankruptcy cases

First thing first, what does a motion for relief from the automatic stay actually mean? It means that at this time you are several months behind on your car or mortgage payment and the bank is requesting permission from the bankruptcy court in order to eventually repossess/foreclose on your car/home. It really should be called motion seeking permission to repossess/foreclose on property, but lawyers like to use all kind of “fancy talk.” The whole motion, summarized into one sentence really states the following: “Dear bankruptcy judge, the following individual is now “xyz” months on their mortgage/car payment and therefore we would like your blessing to commence a repossession/foreclosure on this property.”

Keep in mind that when you file a chapter 7 bankruptcy case, or any type of bankruptcy for that matter, the “automatic stay” goes into effect. The “Stay” is the “Shield” that prohibits creditors from further pursuing their collection efforts like filing a lawsuit, garnishing, repossession or foreclosing. In light of that, secured lenders (the bank that gave you your car loan or mortgage) will need to seek permission from the bankruptcy court before they can continue with their efforts of foreclosing for instance. They will need to file a motion seeking relief from the Stay before they can continue down the path of foreclosure.

And here is why this Motion seeking relief from the stay is virtually meaningless in the context of a chapter 7 case (it has plenty of meaning in chapter 11 or chapter 13 cases!) and why you should not worry if the mortgage company files this motion in your chapter 7 bankruptcy case: The automatic stay in bankruptcy terminates when the discharge is granted. So, in your typical chapter 7 bankruptcy case, roughly 100 days after your file for chapter 7 bankruptcy the discharge order is entered, the cases closes, and the stay is terminated. The foregoing makes sense. Now that your bankruptcy case has concluded the “Shield” goes away. The banks of course know this. They of course also know that once the chapter 7 case closes they have the right to foreclose on you home if you are behind on your mortgage if no loan modification has been worked out. They know that they can sit back, wait about three months, and then pick up where they left off as far as the foreclosure goes. But instead they file this scary motion, notice it for hearing, go before the judge, and with about three weeks before the cases concludes they get the judge to sign off on this motion. Then they wait about three more weeks after your chapter 7 case has closed and initiate foreclosure. It is nonsense. It is a waste of time and paper. Why? Because the filing of this motion does not speed of the foreclosure.

To put it differently, in the past decade I have never once seen a bank foreclose on a home during the 100 days that the bankruptcy was open even though the judge granted the motion and gave them the “green light” to foreclose. The foreclosure, in chapter 7 cases, if it is going to happen, always happens after the bankruptcy case closes. And since most people in this kind of situation have either given up on the house and are planning on “walking away” or they are planning on filing a chapter 13 bankruptcy shortly after their chapter 7 case closes (AKA “chapter 20”) they have nothing to worry about. They can safely ignore this motion.

WILL I LOSE MY TAX REFUND IF I FILE FOR BANKRUPTCY?

WILL I LOSE MY TAX REFUND IF I FILE FOR BANKRUPTCY?
The chances are highly unlikely that you will have to forfeit your tax refund if you file for chapter 7 bankruptcy, unless that is….So, what are some of those “unless” scenarios? Bear in mind that the following discussion is limited to Northern Virginia. As in those bankruptcy cases filed in Alexandria, Virginia. Every state does things a little differently.

Scenario 1: You file for bankruptcy on your own
Part of the deal when filing for bankruptcy is that you have to disclose all of the assets that you own. When people typically think of assets they normally think of houses, cars, furniture, stock, and money in the bank. Tax refunds, or the potential of a tax refund however is not something that most people think of as an asset when contemplating bankruptcy. But the fact of the matter is that the US Supreme Court has made it clear: tax refunds are indeed part of the bankruptcy estate. Part of the estate simply means that it is potentially up for grabs.

The other key thing to keep in mind is that in bankruptcy if you want to keep the asset, you have to exempt the asset. And this is where many people who file a chapter 7 bankruptcy without an attorney (pro se if you want to use fancy Latin terminology) trip up. Around this time of the year (January –May) many people are expecting a tax refund. The tax refund needs to be listed on the bankruptcy petition, properly exempted AND you need to file a timely Homestead Deed. Merely exempting it on the bankruptcy petition is not enough. That last part, the Homestead Deed, really trips people up.
Which brings me to my final point: the chapter 7 trustee is not your friend. So, just because he or she seems nice, and just because they smile at you when they meet with you at the meeting of the creditors does not mean that they will not jump at the opportunity to take your money. And if you think that they will feel sorry for you because you have decided to file on your own, you better think again. They are there to represent the interest of the unsecured creditors. And by the way, just because it is the end of the year, say November 2013, and you decide to file for bankruptcy at that point it does not mean that the 2013 tax refund is not up for grabs. It is in indeed. Once again, it must be listed and properly exempted.
Scenario 2: The careless bankruptcy attorney
If your attorney is in a hurry or careless you could lose part or all of your tax refund. This is especially true if you normally get a sizable tax refund around this time of the year (say $4,000 for instance). How? Because Virginia’s Homestead Exemption typically only gives you $5,000 to exempt your assets with. That means that if you have some other assets that need to be exempted and there are no other exemptions other than the Homestead Exemption (say a life insurance policy with some cash value, a couple of thousand worth of stock, a car with some significant equity, etc) then you will now find yourself in a pickle. You will have to give up something and that something may be worth several thousand dollars.
The solution? Instead of filing your bankruptcy case in January or February of the year before you have filed and received your tax refund simply delay the filing of your case by a few months. So, file your tax return as early as possible, collect your sizable tax refunds as quickly as you can and then spend that tax refund money on necessary household items. Get braces for your daughter, fix your car, put some new windows in the house, pay your bankruptcy attorney their legal fees -that’s especially important- and when most/all of that money is gone a few months later than you can safely file your bankruptcy case. Notice that I said spend your money on life’s necessities. I did not say take a trip to Vegas or “donate” that money to your brother.
So barring the above scenarios, or if you simply are not expecting a significant tax refund, then chances are you have nothing to worry about.

Is your bank account safe if you file for bankruptcy?

What the heck just happened?! Why did the bank just remove all the money that I had in my bank account and clean me out? Why did the bank just rob me is what you might be thinking? Well, the likely answer is because you probably owe the bank some money. The bank was probably exercising its right to a setoff, a right recognized in virtually all states in the United States.

This is what probably happened. You opened up a bank account at your local friendly credit union. Then, at some point, you took out a credit card with that same credit union that offered that unbelievable low rate. Finally, when it was time to finance a car, you once again turned to your credit union. Thereafter, at some point, you fell behind on your car or credit card payments, and so the nice credit union helped itself to the money that you had in your account.

Once you have defaulted on any of your loans the credit union does not need to sue you, they do not have to get court permission, and they certainly do not have to give you advance notice that they are about to help themselves to the money sitting in your account. And to add insult to injury, those outstanding checks that you wrote a few days prior to the bank robbing you (the bank exercising its right to a setoff if you want to get technical), those checks will undoubtedly bounce!

What can you do to prevent this from happening to you? It’s simple. The moment that you realize that you will be unable to make payments on a credit card, personal loan, mortgage payment, car loan, whatever, with the bank/credit union where you also have your checking and savings account, remove all money from those accounts and place them with a bank to whom you owe nothing to.

How about if you have not defaulted on any of your accounts with the bank? Well, in this case you have nothing to worry about, unless that is, you are about to file for bankruptcy. For instance, you want to file for bankruptcy because you have $20,000 in credit card debt with 5 different banks and none of those credit cards is owned by the credit union where you bank. The only ties that you have to your credit union is your bank account and a car loan for instance, which you have never missed a payment on and are current on the day you decide to file for bankruptcy. It does not matter. The moment that you filed bankruptcy you are deemed to have defaulted on your car loan and the bank has a right to “freeze your account.”

And if you thinking –as I am sure you are- what about the automatic stay? You know that powerful invisible shield that automatically activates the moment that you file a bankruptcy case and brings all attempts to collect money from the debtor to a grinding halt?! Well, in this case, not even that will save you. Don’t believe me, then check out the seminal Supreme Court Case of Citizens Bank of Marlyand v. Strumpf, decided in 1995 and see what happened to poor Mr. Strumpf. In that case, the Court made it clear, that the bank/credit union right to a setoff was more powerful than the usually invincible automatic stay. Granted, the bank initially could only “freeze the account” and then have to seek the court’s permission to actually remove that money from the account, but the end result will be one and the same…they get your money!

So once again, the easy solution, if you are contemplating bankruptcy, is to simply remove your money from the bank/credit union where you also have your mortgage, car loan, etc. and deposit that money elsewhere.

Oh, and finally, if you are wondering, what if my direct deposit check from my employer accidentally lands in the same bank account where I just cleared my money out of prior to filing for bankruptcy? The answer is post petition assets cannot be setoff. That would be an automatic stay violation. The bank cannot just take you post-petition money to satisfy a pre-petition debt. But, just because it can’t happen does not mean that it won’t happen. Heir on the side of caution and be sure that your pay checks are landing in the new bank account prior to filing for bankruptcy.