Debt Relief Through Bankruptcy
Bankruptcy provides relief in one of two ways to those individuals who are struggling with overwhelming debt:
- By reorganizing the debt and creating a payment plan that is much more manageable, or
- By causing those debts that are deemed eligible to be eliminated or forgiven. This is also known as discharge of debt.
Still, there are some types of debt that are not eligible for and cannot be discharged in bankruptcy – spousal and child support, student loans and most types of tax debt.
There are two types of bankruptcy available to individuals – Chapter 7 and Chapter 13.
A Chapter 7 bankruptcy, also known as a “liquidation bankruptcy”, will generally allow an individual to eliminate or discharge all eligible debt in 3-5 months after the bankruptcy court’s acceptance of the proposed plan.
A Chapter 7 bankruptcy is generally used by individuals who have:
- Little or no property
- A large amount of unsecured debt (payday loans, medical bills, credit card debt)
- Little or no income
Assets or property that have been determined to be non-exempt are turned over to a bankruptcy trustee who sells the asset or property and then distributes the proceeds of the sale to the individual’s unsecured creditors, such as credit card companies, medical providers, or personal loan companies. In return, the individual is granted a “discharge” of any remaining debt owed to the creditor – the debt is cancelled.
A Chapter 13 bankruptcy is generally used by individuals who:
- Have income and assets they want to keep
- Are behind on their mortgage and want to keep their home
- Have a wage garnishment
- Are behind on their car payment or want to get back a repossessed vehicle
- Are behind on federal or state taxes
Additionally, the filing of a Chapter 13 bankruptcy will at once “stay” or stop any further creditor actions such as foreclosure, garnishment, repossession, seizure, and attempts at collection, including harassing phone calls and letters.
While it is possible to file bankruptcy without an attorney, you risk making mistakes that could result in penalties or having your case dismissed. The guidance and expertise of a knowledgeable bankruptcy attorney is essential in helping you successfully navigate the process and to avoid those pitfalls and mistakes.
Call The Alliance Legal Group at (757) 923-4357 today to schedule a FREE consultation with one of our skilled and experienced bankruptcy attorneys. If you choose to file, we will handle the completion and electronical filing of all of your paperwork and will be by your side in court. We have been serving the city of Norfolk and the surrounding Hampton Roads area since 1995 and have filed thousands of Chapter 7 and Chapter 13 bankruptcy petitions for struggling Virginians just like you.
Our Norfolk office, just one of four conveniently located offices in the Hampton Roads area, is located at 735 Newtown Road, Suite 203, Norfolk, Virginia 23502.