If you are considering Filing Bankruptcy in Virginia, than you must have a basic understanding of the process.
Filing bankruptcy in Virginia is as complex as it sounds and a minor mistake while filing can become a major roadblock to the discharge process.
In many cases a debtor's failure to succeed in bankruptcy can be traced to a simple mistake made by the applicant.
Today, we are going to learn some essential tips, which will help you avoid making any such mistakes.
Here are the top 10 Do’s and Don’ts you must know before filing a bankruptcy in Virginia.
1. Talk to a Virginia Bankruptcy Attorney
Scheduling a session with an attorney will enable you to understand your financial health and choices, and also review the advantages and disadvantages of the various types of bankruptcy.
A Virginia Bankruptcy attorney will analyze your financial health and help you figure out if filing a bankruptcy in Virginia is a viable solution.
You will have the option to file under Chapter 7, 11 or 13. As each option carries different features, a bankruptcy lawyer in Virginia helps you select the Chapter that suits your situation.
2. Don’t Skip any Income
During the Bankruptcy process, the court will analyze at least six months of your household income and will require you to list your household expenses.
You must include all your income while filing for bankruptcy. The court considers all cash inflow as income, whether it’s coming from your second job or from your spouse.
Bankruptcy in Virginia affords an opportunity for the "honest but unfortunate" debtor to obtain a fresh start. One way of jeopardizing that fresh start is to fail to disclose the correct information on your bankruptcy filing, as it is construed as dishonesty and can cause your case to be dismissed for bad faith.
3. Mention all your Assets in Petition
Similarly, it’s crucial for you to include all your assets’ when filing a Virginia bankruptcy. You are required to mention all assets like real estate, furniture, bank accounts, vehicles, etc. regardless of their date of ownership and value.
To avoid any legal errors, make sure you reveal all your assets to your attorney. If you hide your assets, then the court may deny a discharge of your bankruptcy.
4. Don’t sell or transfer your assets
Before filing bankruptcy, make sure you don’t do anything to hide your assets from your credits or the court.
You should stay away from transferring title or ownership of your properties to others. In your meeting with the creditors, the trustee will ask you questions related to the sale or transfer of assets.
Remember, according to Virginia bankruptcy law, a trustee possesses the power to undo any kind of transactions you have made in a certain timeframe prior to filing bankruptcy. If you are unsure of any transfers, you must consult with a bankruptcy lawyer in Virginia to determine if this could create problems in your case.
5. Always keep receipts of your deposits and withdrawals
When reviewing your bank statements, the trustee will inquire about all your deposits and withdrawals, especially if it involves a large sum of money.
It’s imperative that you remember all the dates of your deposits and withdrawals, along with the reason behind it.
It’s always better to keep a record of your purchases, withdrawals, and deposits.
6. Don’t lay hands on your retirement accounts
Virginia bankruptcy law protects your retirement accounts from creditors and exempts them from your bankruptcy estate. However, if you withdraw them before filing a bankruptcy, than you will lose all protections on these accounts.
Also, withdrawing from retirement funds can lead to penalties and taxes. When you file bankruptcy, your taxes and penalties will not be discharged by the court, which will only lead to more burden on you financially.
7. File your Taxes
When filing a bankruptcy in Virginia, the court will ask you to submit most recent tax filings. Therefore, it's crucial for you to file your taxes before filing.
In a Virginia Chapter 7 bankruptcy, the court will keep your case open unless or until you submit your proof of tax returns and tax refunds.
Under Chapter 13 bankruptcy in Virginia, it is mandatory that you have filed your last four years of federal and state tax returns.
8. Consult a Virginia Bankruptcy attorney before pruchasing anything prior to filing a bankruptcy in VA
When you file a bankruptcy, all your creditors are notified. If they discover any suspicious transfers or purchases prior to bankruptcy, this can impact your right to a discharge or result in those transfers being reversed as fraudulent or preferential.
9. Create a Separate Account for Certain Funds
A bankruptcy lawyer in Virginia can exempt some of the money you have received through social security, personal injury settlement, etc. However, you may lose any applicable exemption if the funds are commingled with other monies and cannot be traced back to their source.
As a result, it’s better for you to create a separate account for these exempt funds so the source of the funds is clear.
For example, you can create a bank account where you only deposit social security payments.
10. Don’t file if your medical conditions are not stable
Your insurance doesn’t cover all kinds of treatment and if you face any health complications, you may end up paying a hefty sum of money.
If medical debt is the reason behind filing for bankruptcy, than it’s better to wait for a complete recovery, because any future medical bills will not be included in your discharge.
If you file a bankruptcy in Virginia and face medical complications for the second time, than you will be responsible for that medical debt.
If you are new to bankruptcy, then it’s crucial to approach a Virginia Bankruptcy Attorney to guide you throughout the process. Bankruptcy is a complex procedure and an attorney will make the process much smoother.
Hopefully this article explained enough for you to understand some essential tips on filing a bankruptcy in Virginia. If you have any other questions please contact us for a free consultation.