The Basic Process of a Virginia Chapter 7 Bankruptcy
A Virginia Chapter 7 Bankruptcy can be the road to brighter future. Below is a step-by-step explanation of the basic process of a Virginia Chapter 7 Bankruptcy provided by our Williamsburg Newport News Bankruptcy Attorneys.
The RulesThe Federal Rules of Bankruptcy Procedure and local rules of the bankruptcy court govern the procedure of a Virginia Chapter 7 Bankruptcy. Newport News and Williamsburg fall under the jurisdiction of the Bankruptcy court for the Eastern District of Virginia, Newport News division. The rules contain a set of official forms for use in Chapter 7 bankruptcies.
These rules govern how debtors and their attorneys gather information and submit the forms. Your initial meeting with an attorney will focus on gathering the necessary documentation and data to properly comply with the applicable rules. Your attorney should explain to you certain important rules and how they apply to you particular circumstances.
The Petition and Means TestEnsuring accurate information is essential for a proper filing, as you will be signing your petition under penalty of perjury. As such, it may take several meetings with your attorney to ensure you have accurate information. After you have complete, signed, and submitted your petition, the Court will docket the matter and appoint a trustee to oversee the case.
In order to qualify for a Virginia Chapter 7 bankruptcy, the debtor must pass what is commonly called the "means test." The test balances the income of the debtor with the debtor's monthly expenses to determine eligibility. If the debtor's income is under a certain threshold, the debtor automatically qualifies for a Chapter 7 bankruptcy and need not supply information about monthly expenses.
During the BankruptcyWhile the bankruptcy judge holds the official decision making power in a bankruptcy, involvement with the judge is minimal. In fact, a typical Chapter 7 debtor may not appear in court at all unless a creditor objects during the proceedings. Much of the bankruptcy is conducted outside the courthouse. The debtor will have much more interaction with the bankruptcy trustee.
Usually, the only proceeding at a debtor attends is the meeting of creditors, also called the "341 meeting". These meeting occurs within 20-40 days after the filing of the petition. It is at this meeting that creditors can ask questions of the debtor about the debtor's debts, income, and property. The trustee conducts this meeting and, if you are represented by counsel, your attorney should be present.
During a Virginia Chapter 7 Bankruptcy, the trustee takes control of the debtor's assets. Then, the trustee determines whether there is any value in the property that is not exempt from the bankruptcy. The trustee determines whether sale of the assets and distribution of proceeds to creditors is appropriate. Because there is usually little nonexempt property in most chapter 7 cases, there may not be an actual sale of any of the debtor's assets. These cases are sometimes called "no-asset cases."
The DischargeAfter the sale of assets and distribution is complete, the debtor receives a discharge. The discharge releases him or her from personal liability for certain dischargeable debts. This usually takes place a few months after the petition is filed. After the discharge, your attorney should help you send a letter to the Credit Reporting Agencies reporting the discharge. Your attorney may also be able to help you release any judgment liens.