Boyle, Bain, Reback & Slayton is a full service law firm that has been serving the residents and businesses of Central Virginia since 1966. We specialize in a number of areas of law, including bankruptcy, and are a debt relief agency that helps people file for bankruptcy relief under the federal bankruptcy code. Please contact us for a free initial consultation to learn if bankruptcy may be the right option for you to get a fresh start.
Boyle, Bain, Reback & Slayton FAQ
Q: What is bankruptcy?
A: Bankruptcy allows people to get rid of debts that they cannot afford to pay. It is a Constitutional right granted in Article 1, Section 8 of the United States Constitution. There are generally two types of bankruptcy that people can file – Chapter 7 and Chapter 13.
Q: What is Chapter 7?
A: Chapter 7 bankruptcy is what some people call “Straight Bankruptcy.” It is a way to get rid of your unsecured debts (e.g. credit cards, medical bills, personal loans, payday loans, etc.) and get a fresh start in life. In return for getting rid of your unsecured debts the court has the right to sell any property you own that you cannot protect. The court does this by appointing a trustee to take possession of whatever property you own that you cannot protect, sell it and use the money to payoff as much of your unsecured debts as possible. After the money from the sale of your things is gone, the remaining debts are discharged (i.e. wiped away) and your personal obligation to pay them in the future is gone. Your case is then closed.
Q: What is Chapter 13?
A: Chapter 13 has also been called a “Payment Plan Bankruptcy” or a “Wage Earner Bankruptcy.” It is a way of having some or all of your debts paid back over time out of your wages. Like a Chapter 7, you list all of your property and all of your debts. But unlike Chapter 7, you get to keep all of your property. Instead of selling your property to pay your debts, the court accepts monthly payments from you for 3 to 5 years. Those monthly payments are used to pay your debts. The main reason you may choose to file a Chapter 13 is because you can catch up on mortgage payments and/or car payments on which you are behind as of the date of filing. This means you will not lose your house and/or car in Chapter 13, so long as you keep your payments current after filing bankruptcy. Another benefit is that my attorney fees can generally be paid out of the monthly payments that you make to the court. Chapter 13 also gives you the ability to reduce the amount you must pay to a creditor for your car if you bought the car over two and a half years ago. If you did, you can reduce what you owe to the fair market value of the car and you can reduce the interest rate that you pay on that amount to about 6%. Even if you bought your car within the past two and a half years, you can still reduce the interest rate that you pay on the balance due as of the date you filed bankruptcy to about 6%.
Q: Can I keep my house in Chapter 7?
A: If the fair market value of your home is equal to or less than the sum total of your mortgages (i.e., first mortgage, second mortgage, etc.) then you will not lose your house if you file a Chapter 7, so long as you stay current on your payments. Even if the fair market value of your home is greater than the sum total of your mortgages, you may be able to keep your house if the excess can be exempted using your homestead exemption (See How much property can I protect from the trustee?), or if you are married, own your home with your spouse as tenants by the entirety, and you and your spouse have no joint unsecured debts.
Q: Can bankruptcy stop a foreclosure or repossession?
A: Yes. You can stop a foreclosure sale of your house or the repossession of a vehicle by filing bankruptcy. You must file the bankruptcy before the date and time of the sale of the house or vehicle. If you want to keep the house or vehicle, you will most likely have to file a Chapter 13 to catch up on the payments on which you are behind as of the date of filing bankruptcy.
Q: Can I keep my vehicle in a Chapter 7 if I am still paying for it?
A: Yes. You can keep your vehicle if you are current on the payments when you file and stay current on the payments thereafter. You can also pay off the loan with another loan from a different lender.
For more information about bankruptcy, visit bbrs.net/forms.html