Over the course of the long and proud history of Virginia, many of the politicians and captains of industry that helped to build our state and the larger nation of the United States of America have seen fit to consider the need for Chapter 7 debt elimination bankruptcy protection to shield their families’ financial futures from the vengeance of predatory lenders. However, midst the explosion of credit availability (and, less avoidably, the escalation of medical costs even as fewer and fewer Virginians can comfortably attain health insurance), the rules surrounding bankruptcy were thoroughly altered just under four years ago, and the residents of our state should no longer feel absolutely certain that governmental protection would necessarily save their household from wage garnishment or similar legal actions undertaken by particularly venal creditors. Indeed, given the new realities of bankruptcy regulations, every Virginia head of households should endeavor to educate themselves about the Chapter 7 bankruptcy program as it currently stands. Even presuming that the Virginia residents will take advantage of legal counsel prior to their bankruptcy petition – which, and this cannot be over stressed, should be considered of primary importance regardless of the (sadly extravagant) costs – the more that borrowers know before they start talking to their attorneys, the less money the borrowers will have to end up paying the firm to answer relatively simple questions about the bankruptcy process. Once again, much as their expertise should be deemed necessary for successful protection, attorneys practiced and adept at both local Virginia statutes and the United States Bankruptcy Code will charge a pretty penny for every moment of their time, and, considering the potential constraints of the Virginia borrowers’ situation, any head of household reading this article and hoping for bankruptcy as a potential solution shouldn’t have the cash on hand to wastefully throw around on a process of discovery whose introduction could as easily be started at home.
Admittedly, portions of the bankruptcy legislation would be more than difficult to comprehend for ordinary Virginia debtors who do not already have some experience in parsing legal jargon, and, given all of the various chutes and ladders of the differing exemption schemes offered by the state of Virginia and the federal government, it would be somewhat disingenuous to pretend that even the most well prepared borrower could sail through the straits of bankruptcy absent a seasoned hand at the till. Nevertheless, many of the fundamental principles of bankruptcy protection could be understood by most any resident of Virginia, and, by just learning a bit more about the process before hand, the borrowers will eventually save hundreds of dollars (hundreds of dollars presumably better spend upon the actual debts) by educating themselves about the bankruptcy process as much as could be expected by the average citizen. For instance, in the years following the adoption of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, Virginia debtors have had to list their income sources with far greatest documentation. Precise accuracy of the data presented upon the initial bankruptcy petition is of exceedingly high importance – even relatively meager household income sources like after school jobs of minor dependants and petty dividends from forgettable investments or temporary sources such as public assistance from workers’ compensation and unemployment insurance – because the primary qualification for admittance to Chapter 7 debt elimination bankruptcy programs has switched under BAPCPA from the amount of financial burdens held by the Virginia household to the amount of money made in the year prior to filing the bankruptcy petition.
One of the more tragic scenarios for Virginia borrowers who fight their credit obligations until their veritable last breath, never attempting to file for Chapter 7 bankruptcy protection until the last possible moment, comes all too often these days: Virginian households who simply make too much money to easily declare bankruptcy regardless of the debt loads yet, by struggling to repay loans through traditional means, sufficiently harm their credit ratings and drain available resources so that they cannot utilize different means of debt relief. According to the alterations to the United States Bankruptcy Code forced by the Bankruptcy Abuse Prevention and Consumer Protection Act, borrowers are only allowed to enter Chapter 7 debt liquidation programs if they’ve demonstrably made less than the median income for residents of their state. As of the date this article appears, Virginia wage earners living alone would only be able to make forty six thousand dollars. Two member Virginia households would have to prove an income below sixty one thousand dollars, three member Virginia households would have to make less than sixty nine thousand dollars, and four member Virginia households would have to make less than eighty thousand dollars (there’s an additional seven thousand allowed for each member of the household beyond four). Once again, this test of Chapter 7 legitimacy has nothing to do whatsoever with the size or nature of the Virginian family’s credit account balances. Uninsured Virginia households faced with expensive medical procedures and enduring hospitalization of a family member could helplessly find their debts expand to six or even seven figures, but, still, should they have previously made even a few hundred dollars more than their fellow Virginia residents, Chapter 7 bankruptcy would be unavailable no matter how much the program may be deserved.
Nevertheless, considering how closely the borrowers’ bankruptcy petition will be analyzed by the Virginia county courts prior to discharge, they should never even think about leaving off the slightest bit of recognizable gross household income regardless of the consequences for their qualifications for Chapter 7 debt elimination bankruptcy. In the same fashion, borrowers should not think about misleading the Virginia trustee about the extent of their property or possessions no matter how theoretically minimal the value of the property may seem to the household. Many Virginia borrowers attempting Chapter 7 bankruptcy protection have seen their declaration thrown out by the judge days before the discharge of the applicable unsecured debts – and well after the borrowers had spent hundreds or thousands of dollars upon the attorneys, Virginia county court administrative fees, and the credit management classes newly required by the BAPCPA legislation – simply because the heads of household forgot about one item or simply didn’t believe it would ever be considered an asset by the bankruptcy authorities. Not only could this sort of willful (and, whatever the truth, should the Virginia courts learn of the asset, they shall believe even the most genuinely unintentional slips to be evidence of deceit) lapse immediately and irrevocably result in the courts declining the borrower’s bankruptcy petition, some debtors may actually face criminal charges for fraud against the government. If residents are genuinely this concerned about their property, they should first check the various schedules of exemption before filling out their bankruptcy petitions to see whether or not this would even be an issue. As previously written, so much of the process of Chapter 7 bankruptcy could be simply uncovered through a rigorous bout of self education among the Virginia residents filing for protection, and, especially in the case of Chapter 7 bankruptcy exemptions, there are so many different variables to continue that no borrowers should expect even the most skilled attorneys to decide the pros and cons of each maneuver.
Should Virginia borrowers, after examining their household income in comparison to the earnings of similar families in their state, believe that they have a decent chance at arranging Chapter 7 debt liquidation protection, their next step must be an examination of both of the property exemption plans currently available for Virginia residents declaring bankruptcy. In the years following the Bankruptcy Abuse Prevention and Consumer Protection Act’s transformation of the United States Bankruptcy Code, the allowances offered by the federal government have been dramatically limited, but the homestead exemption available nationally still trumps the local alternative. Under the federal guidelines, borrowers nationwide shall be allowed to keep their homes no matter what as long as the recently appraised value of the residence would be assessed at less than twenty thousand dollars (forth thousand dollars for married couples living together) above the existing mortgage and equity loans attached to the property. Under the Virginia statutes, however, that number will fall to just five thousand dollars (with another five hundred dollars for every additional dependent), and, much as every part of Virginia has seen the real estate market crumble during our current recession, there are many families whose lingering wealth lies within their primary residence and who just reasonably could not risk losing ownership of their homes. For these Virginians, despite how flimsy the other exemptions provided by the federal government may be, they’ll really have no choice at all but to avoid the state’s exemption plan – borrowers must choose one other the other – should they insist upon going through with the Chapter 7 debt elimination bankruptcy procedure.
At the same time, however, Virginian families that rent – or, as happens so often with the incessant salesmanship for debt consolidation loans in this climate, no longer have the equity within their personal residence to need worry about the homestead exemption – would be far better served by the local schedule of exemptions. Employing the Virginia household exemptions, residents wouldn’t have to worry about the primary motor vehicle (presuming there’s no more than two thousand dollars over the blue book value after all loans are recognized) nor the family’s wedding and engagement rings and bands regardless of value. Virginia exemptions also cover one thousand dollars worth of clothing used by the family. Furthermore, as one should expect from the Virginia legislature, the family bible, the health aids deemed medically necessary, and, of course, any family pets are all judged to be beyond the boundaries of asset forfeiture by the courts. Our state does protect it’s own, after all, and Virginians are uniquely protected under the local mandate. Burial plots and all bank accounts formally saved towards funeral necessities are protected under Virginia regulations up until the expense passes five thousand dollars, and the artwork and heirlooms in any way connected to ancestral family history have the same monetary cap. Compared to the federal guidelines, the exemptions allowed Virginia residents are relatively liberal, but, nevertheless, any borrowers imagining bankruptcy protection to be some sort of harmless solution should look further into the program.
All of the furnishings for the Virginia household petitioning for bankruptcy protection – from carpets and coffee machines to kitchenware and linens to beds and desks … essentially everything that makes a house a home – has a specific limit of five thousand dollars. Tools of trade – whether library or professional implements or even automobiles – for the head of household will have a limit of ten thousand dollars, but farmers in Virginia are allowed a wagon, a rake, a pitchfork, two wedges, two plow animals plus necessary equipment, and fertilizer and associated fertilizer material valued up to a total of a thousand dollars (a separate tractor will have a value of three thousand dollars). Military arms and apparel required by nature of service are protected regardless of values as are all awards from personal injuries and wrongful deaths. Benefits from public assistance (unemployment and disability and veterans’ and so on) are generally vouchsafed by the Virginia exemption scheme, most of the pensions and retirement plans will also not be touched by the same statutes, and three quarters of the Virginian household’s wages earned that remain unpaid shall also be left alone depending upon the date and purpose of the funds involved. Virginia borrowers reading this article, though, should understand how very arguable all of these stipulations may be, and they absolutely have to recognize the central emphasis of bankruptcy attorneys experienced in the arcane challenges of governmental finance law within the successful Chapter 7 application.
For borrowers living within Virginia who do not have the financial wherewithal to afford proper legal counsel to successfully navigate governmental regulations but who also have earned sufficiently healthy incomes and whose households have furnishings that could be considered potential assets, the dangers of Chapter 7 debt elimination bankruptcy protection may outweigh the potential rewards. As a stroke of good fortune, the same economic system that allowed the free flowing credit to descend upon Virginian residents who did not perhaps deserve their account balances to begin with has also blessed our state with a path out of the maelstrom of seemingly immobile financial obligations. Even though Chapter 7 bankruptcy could be effectively welcomed and even accomplished by a sliver of the Virginian citizenry, the threat of unsecured credit liquidation looms large in the minds of the lenders, and one program – debt settlement negotiation – has won applause from all sectors of the Virginian economy. Settlement negotiation teases creditors with the notion that their clients may take advantage of bankruptcy protection and, instead, offers a rapidly heightened system of payments that shall ensure all owed funds (following the forty to sixty percent removed from the top) are satisfied within three to five years. As with bankruptcy, the success of the operation depends upon the specific debts – including the identity of the lenders; not all of the credit card companies and collection agencies have the same patience for settlement negotiation – and the capacity of the specific debtors involved. Unlike bankruptcy, debt settlement negotiation provides counselors more than willing to discuss every last detail of the Virginia borrower’s situation for free. Depending upon the households’ time availability and region, online consultations with a certified debt settlement professional may be preferred, but, considering the constraints of bankruptcy protection for Virginia borrowers, there seems reason to take the hours necessary. To be honest, at the very worst case, the settlement specialists shall just tell their potential Virginia clients to attempt Chapter 7 bankruptcy, but, keep in mind, that’s only ever at the very worst case: better solutions to overwhelming credit burdens do now exist.
The decision to reach out for help with your debt is not one that's easy to make. You were raised to "do the right thing", but now it’s nearly unbearable. You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water.
Ask yourself this. If you could eliminate your debt without permanently damaging your credit, why wouldn't you?
