Bankruptcy in Colonial Heights, Virginia is a court proceeding which allows an individual or business who is drowning in debt to be discharged of their legal obligation to pay off some or all of their debt. Hopefully, this will allow both the debtor and creditors to move on with their lives. However, bankruptcy is not a free ride, allowing someone who simply doesn't feel like paying their debts to get out of that legal obligation. It is designed to prevent debt which has slight chance of ever being paid back from ruining the life and finances of the debtor. It also carries significant long-term consequences, which must be carefully weighed against the potential benefits. For example, bankruptcy makes it very difficult for the debtor to obtain credit in the near future.

Accordingly, you should speak with a good Colonial Heights, Virginia bankruptcy lawyer. Your Colonial Heights bankruptcy lawyer can inform you of the costs and benefits of filing for bankruptcy, and give his or her professional evaluation as to whether or not it's a good option, given your specific circumstances.

Types of Bankruptcy in Colonial Heights, Virginia

In Colonial Heights, Virginia, there are three basic bankruptcy schemes that are most frequently used. They are identified as Chapter 7, Chapter 13, and Chapter 11. Being a product of federal law, the procedural rules governing bankruptcy in Colonial Heights, Virginia will be very similar to those in any other part of the United States. Chapter 7 bankruptcy requires the debtor to liquidate some of his or her property, and use the proceeds to pay creditors. While this doesn't sound like much of a relief at first glance, the upshot is that once the appropriate property is sold, and the proceeds given to the creditors, all of the debtor's eligible debts are deemed paid in full, regardless of how much the creditors actually ended up getting. Not all of the debtor's property has to be sold off - the debtor will typically be allowed to keep things like a house, at least one car, some types of personal property, retirement accounts, and insurance policies. It should be noted that some debts are not dischargeable, and will have to be paid in full even if the debtor files for bankruptcy. This includes student loans, taxes, and criminal fines.

The other commonly used bankruptcy system in Colonial Heights is Chapter 13 bankruptcy. This allows a debtor to repay most or all of their debts in a structured manner. It reorganizes the debt into lower periodic payments that, with a bit of frugality, the debtor should find manageable. This allows the debtor to continue to earn a living, and allows the creditors to eventually collect what they are owed. Once a repayment plan is approved by the bankruptcy court, creditors are legally barred from seeking repayment under the terms of the arrangements that gave rise to the debt in the first place, and will instead have to accept payment under the new plan. Chapter 13 bankruptcy is typically a better option for people who have a steady income. Though Chapter 11 bankruptcy can be used by individuals, it is almost exclusively used by businesses. Similar to Chapter 13, Chapter 11 involves restructuring of debts, rather than complete discharge. The debtor is required to come up with a restructuring plan that lays out how it plans to cut costs, streamline operations, and pay its debts. The plan must then be approved by a vote of participating creditors.

While going through Chapter 11 bankruptcy, a business can continue operations, and its stock can continue to be traded.

How Can a Colonial Heights Bankruptcy Lawyer Help?

One should not make the decision to file for bankruptcy in Colonial Heights lightly. Before making any such decision, it would be highly advisable to contact an efficient Colonial Heights bankruptcy attorney.