No one wants to file bankruptcy, but sometimes it is necessary. Individuals may be trying to stop a foreclosure or the repossession of an automobile. When a bankruptcy is filed, the Judge issues an automatic stay. Creditors have to stop collection activities, including foreclosures, repossessions, phone calls and nasty letters. It is recommended that people consult an attorney before filing.
The Personal Bankruptcy Lawyers in Richmond consults with clients, and make recommendations. They ask for paperwork including tax returns, a list of creditors, monthly budget and deeds to any property owned. This information helps the attorney recommend which bankruptcy chapter should be filed. Everyone who files bankruptcy must undergo credit counseling at least six months before filing. Individuals must also go through what is called “the means test.” The Court compares the median income for that state with the individual’s average income for six months. If the income is below the state median, chapter 7 may be filed. In a chapter 7, the Court Trustee will sell most of the filer’s assets to repay creditors. Each state determines what assets are exempt from liquidation. Some states don’t allow any exemptions. If an individual owes taxes, chapter 7 is good for them. The I.R.S. and State must stop trying to collect taxes during a chapter 7.
Under chapter 13, an individual makes a monthly payment to repay creditors. In order to file, there must be a source of regular income. The Personal Bankruptcy Lawyers in Richmond will advise you that a repayment plan lasts for three to five years. One of the benefits of chapter 13 is paying a reduced amount of unsecured debt. People usually pay around ten percent of what they owe on credit cards and medical bills. They also get to keep their assets, as long as they’re making monthly payments. Bankruptcies stay on the credit report for many years. However, most people start getting new offers of credit shortly after filing. It is important that people take the credit counseling to heart. Learn new financial methods to avoid getting in over your head. A clean slate won’t help if you repeat the same mistakes. Visit Website for more details!
