Most people sincerely wish to pay their debts. Unfortunately, sometimes such unanticipated circumstances as the loss of a job or a serious illness or a divorce can effectively ruin your ability to pay your creditors and can drain savings you may have worked years to accumulate. You may have tried working things out with your creditors only to find that, at best, you’re just treading water and you feel you will never get out of debt. If your financial situation is more serious, you may find yourself sued by your creditor. And if they obtain judgment against you, they can garnish your wages and bank accounts. And, of course, if you fall behind on your mortgage, you can lose your home to foreclosure. Often, when your financial situation becomes serious enough, the only way you can stop your creditors is by seeking bankruptcy protection.

Filing bankruptcy immediately stays your creditors’ efforts to collect from you, and allows you to make a fresh start once you have received your bankruptcy discharge. At Law Offices of Jonathan Gelber, PLLC our Virginia Collections Attorneys can assist you by handling either a Chapter 7 or a Chapter 13 bankruptcy as the facts of your case warrant.

A Chapter 7 case is also known as “liquidation” bankruptcy. In general, most people choose to file a Chapter 7 bankruptcy when they can. It is simpler and quicker than a Chapter 13 proceeding and most, but not all of your debts are discharged, but if you own property that you are unable to exempt under state law, the bankruptcy trustee may sell your non-exempt property to satisfy your creditors. If, however, you have non-exempt property that would be at risk in a Chapter 7, you would probably consider a Chapter 13 filing instead. There may also be circumstances where your income level, or your monthly income to expenses ratio require you to file a Chapter 13 petition.

A Chapter 13 filing, on the other hand, requires you to your pay back your unsecured creditors at least what they would have received if you filed for Chapter 7. You will be required to submit a payment plan, to be approved by the court, usually lasting three to five years. Chapter 13 makes sense if you have steady income and just need time to pay back your obligations or if you wish to stop a foreclosure or repossession, while providing you a chance to pay back the arrears on your house or car. A Chapter 13 filing would also allow you to keep an asset such as a house holding significant equity that you would lose in a Chapter 7. You are also able to discharge some debts in a Chapter 13 bankruptcy that you cannot in a Chapter 7.

If you believe that bankruptcy may be your only option, or even if you just want to talk to a lawyer about your rights versus your creditors, please contact us.