What is Chapter 7 Bankruptcy Law?

Chapter 7 Bankruptcy Law in Virginia is a form of debt relief available to individuals and businesses in Virginia. Through Chapter 7, debtors can eliminate some of their debt by having their assets sold off to pay creditors. The process is supervised by a bankruptcy trustee who takes control of the debtor’s assets and distributes the sales proceeds to creditors. Generally, the debtor is allowed to keep certain items such as their income, home, vehicle, and personal belongings. In order to be eligible to file for a Chapter 7 bankruptcy, debtors must pass a “means test” to demonstrate that their ability to pay their debts is limited. The means test looks at various factors such as the debtor’s income and expenses to determine if their debt is too great to manage. Once a person or business files for Chapter 7, a court-appointed trustee will review the creditors’ claims to determine which debts will be discharged. In most cases, Chapter 7 bankruptcy is complete within four to six months. During the process, creditors are forbidden from contacting the debtor, engaging in debt collection activities, or foreclosing on their property. Once the bankruptcy case is complete, the debtor will no longer be liable for any of their discharged debts. While Chapter 7 bankruptcy can provide much needed relief to borrowers, it will impact their credit score and should only be considered as a last resort.

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What is Chapter 7 Bankruptcy Law?

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