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Are You Considering Chesterfield Bankruptcy?

The uncertainty that often comes with carrying a huge debt burden can be stressful. No two people have the same financial situation or the same vision for the future. Bankruptcy can help you handle your debt problems and help you get a fresh start. It will also negatively affect your credit for several years. 

While every case is unique, the attorneys at Chesterfield Bankruptcy Law answer many of the most frequently asked questions below to help you better understand how or if Chapter 7 or Chapter 13 bankruptcy is right for you.

Bankruptcy and Divorce - What should we know?

When a two-income household becomes two single-income households, there are often financial problems. It is important to see an experienced Chesterfield bankruptcy attorney BEFORE you sign a separation agreement or divorce and agree to sole responsibility for specific debts. If there is a lot of joint debt, you and your estranged spouse may benefit from filing a joint bankruptcy that will give both of you the best fresh financial start.

Do I have to go to court?

You must attend a hearing with the bankruptcy Trustee who is appointed to review your case. This is a requirement! We will be there beside you and will have helped you answer the standard questionnaire used for the hearing. You will answer some simple questions and it takes only a few minutes. There are roughly a dozen cases scheduled each hour and you may be the first or the last case filed, so your total time is normally less than an hour.

Do taxes go away in bankruptcy?

Sometimes. The rules about taxes and Virginia bankruptcy are complicated and require special review. A word to the wise, even if you can’t afford to pay taxes that you owe, it is ALWAYS better to file the tax return on time. Filing the returns starts certain time clocks that can be critical in discharging taxes.

How can I afford to file bankruptcy if I can't pay my current bills?

This is the primary reason we provide a free initial consultation. There may be bills that you are paying that you can stop paying to free up funds for the bankruptcy costs. We discuss this in detail after we know more about your financial situation.

I have a special situation. Can I still file?

In 25+ years of practicing only bankruptcy law, EVERY client’s situation is unique to that person. Explaining your special circumstances lets us help you deal with the situation you have.

I own a business. Does it need to file bankruptcy?

That is an excellent question that requires we exam your situation in great detail with you. This is best discussed after you provide detailed financial information about the business.

I'm being garnished. What are my options?

Call immediately and schedule a consultation with an attorney. We review the garnishment with you and ensure the creditor followed the law. We may be able to get some or all of the garnished funds back for you if you act quickly.

If my spouse and I owe a debt together, how does bankruptcy affect that?

Your responsibility may be discharged but your spouse is still responsible for the entire debt, not just half of it. This is the reason we typically encourage both of you to file bankruptcy in Chesterfield. This is especially true of joint tax debt.

Should I try Debt Settlement instead of Chapter 7 or Chapter 13 bankruptcy?

Probably not. If your creditors call frequently, the Debt Settlement company is happy to take those calls for you in exchange for a fee much higher than you pay for bankruptcy. They cannot prevent lawsuits or garnishments, which bankruptcy will do.

It may feel good to stop getting so many calls from your creditors, but every month that you are in a debt settlement program, your credit score goes down. In Chesterfield bankruptcy, your credit score takes a one-time hit when you file. It almost immediately starts to rise as the bankruptcy filing date gets older.


In debt settlement, in the very fine print, they tell you that any settlement may cause you to owe taxes. Your creditors must file a 1099-C Cancellation of Debt Income with the IRS, and you will pay taxes on the canceled debt.


For example, you owe a credit card $3,500 and the Debt Settlement company reaches a settlement where you pay $2,000 to the credit card company. $1500 in Cancellation of Debt Income gets added to your income for that tax year and your taxes increase for that reason. Bankruptcy does not result in this fictional income and increased taxes for you.

Should I use my retirement account to pay my credit cards?

NO! ABSOULTELY NOT! It takes a long time to accumulate retirement funds and bankruptcy protects them from your creditors. Nothing is sadder than learning that a client has exhausted a 401(k) paying credit cards that they can fully and easily discharge in bankruptcy. Keep your retirement money!

What if I transfer property to someone else to protect it before filing bankruptcy?

You likely put the property at risk more by doing that than if you discussed it with an experienced Chesterfield bankruptcy attorney before doing it. You may have done a fraudulent conversion. A bankruptcy trustee can undo this type of transfer for up to 5 years before the bankruptcy is filed. Please discuss any recent transfer of any property with us ASAP to see if the transaction can be safely undone.

What debts don't go away in bankruptcy?

Child support and spousal support (alimony), most student loans, recent taxes, court fines and restitution, debts that you purposely fail to list, and debts incurred while under the influence of drugs or alcohol resulting in death or personal injury.

What is a reaffirmation agreement and what does it mean for me?

The car lender may require you to sign a reaffirmation agreement after your case is filed. A reaffirmation is a long, fancy name for a new contract with the same lender signed after the bankruptcy in which you again promise to pay them for the car.

If your vehicle loan is not with a credit union, and your budget says you don’t have enough income to pay for the car, the Richmond Bankruptcy Court generally denies the reaffirmation unless the lender is making a significant concession that improves the terms of the loan for you. Why? The Court does not want you responsible for any deficiency if the lender repossesses the vehicle because you truly can’t afford the payments. Or, if the vehicle breaks down, you can simply turn the vehicle in and the lender can’t make you finish paying for it.

If you financed a vehicle through a credit union, a reaffirmation will mean that they can repossess the vehicle if you fail to make your payments on time or fail to keep the vehicle insured despite the bankruptcy. A credit union reaffirmation is effective as soon as you sign it and you will not get the title until you pay the loan in full. Any deficiency balance after a repossession is STILL YOUR RESPONSIBILITY. 

Will I be able to buy a house or car after bankruptcy?

You can replace a vehicle almost immediately after filing your case. However, you may have a limited number of dealers willing to work with you until after your case is discharged (about 3 to 5 months after filing for Chapter 7), and you won’t get a great interest rate.


You likely will have to wait for 3 to 4 years before purchasing a house. The guidelines for mortgages change frequently, so this is not a “one size fits all” situation. If you improve your credit score after your Chesterfield bankruptcy case ends, ensure your credit report is accurate, and use credit wisely, you may receive approval for a home loan.

Why do I have to list my house in the bankruptcy?

Federal bankruptcy code requires that you list ALL of the debts you owe in the bankruptcy filing. If you owe a relative, friend, or employer, you have to include those debts too. You are asking the Bankruptcy Court to relieve you of your debts and you must be completely honest with the court for this powerful relief to be granted.

Will everyone know I filed bankruptcy?

No. It is not published anywhere. Only those that you tell, and your creditors, will know.

Will I lose my house in bankruptcy?

In most cases, no! This is because you have limited equity in the house. Equity is the amount your house is worth after subtracting the amount owed on the mortgage and the homestead exemption that you are allowed under Virginia law.

If you have significant equity in the property, you may need to file Chapter 13 to protect the house. This is something we spend a lot of time discussing with you. It is the reason we require a number of legal documents pertaining to each piece of real estate.

Will I still be able to see my doctor/dentist or go to the same hospital?

Often there will be no interruption in seeing the same medical provider, especially hospitals. If a doctor or dentist refuses to continue treatment, you may need to find a new provider. If the debt owed to the doctor/dentist is fairly low, you may be able to set up an affordable payment schedule for that debt.

Will my employer find out I filed bankruptcy and fire me?

No. It is against federal law to fire someone for filing bankruptcy. We routinely file for people who have security clearances (and keep their clearance) because a judgment or collection phone calls are of more concern to employers. The military often suggests bankruptcy to someone having debt problems.

Will the court take my tax refund?

In most cases, no. You can often protect your tax refund under the exemptions you can claim under Virginia law. Chesterfield bankruptcy trustees are only concerned with any tax refund you will receive after your case is filed.


During the tax refund season, we look very carefully at the refunds you expect and you can protect them. DO NOT PAY BACK A FRIEND OR RELATIVE FROM YOUR TAX REFUND. The bankruptcy court can require that person to give the money you paid them to the bankruptcy trustee.


If you want to pay the person back, you may be able to do so AFTER you file bankruptcy and claimed the refund as exempt (which you and your friend can’t do after you pay the money back).

Can I keep my car/vehicle?

Yes, if you continue making payments and keep it properly insured. But you don’t have to. If the vehicle is having mechanical issues, or the payment is too high, you can return it to the lender (surrender the vehicle) and not make any further payments. The lender cannot seek payment of a deficiency if you surrender the vehicle in bankruptcy because the whole debt on the vehicle is included in the discharge.  


The attorneys at Chesterfield Bankruptcy Law can help you file bankruptcy and wipe out debt while protecting your assets.

Bankruptcy is a last resort. There may be alternatives that can help you deal with the financial burden. Call us at 804-706-1355 for more information and to find out if bankruptcy is the best option for you.

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