Do I Qualify for Chapter 7 Bankruptcy in Virginia?
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To file for Chapter 7 bankruptcy, you must meet certain income rules. These rules are checked through something called the "means test." Most low-income Virginians do qualify. And even if you don't, there is always Chapter 13 bankruptcy, which lets you repay debts over 3 to 5 years under court protection.
Talk to a lawyer before you file. Bankruptcy has many rules. Small mistakes can cost you property or get your case dismissed. A lawyer can help you avoid those mistakes.
Free legal help may be available: Call 866-LEGLAID (866-534-5243) or visit virginialawhelp.org/get-legal-help to find a legal aid office in your area.
You can also search for a bankruptcy lawyer using the National Association of Consumer Advocates (NACA) tool: consumeradvocates.org/findanattorney. Under "area of practice," select "bankruptcy" from the drop-down menu.
This article is a general overview to help you understand the basics of bankruptcy so you feel more prepared when you speak with a lawyer. Every situation is different. Please talk to a lawyer about your specific case.
What is the "means test"?
The "means test" is how the court checks if you qualify for Chapter 7. It looks at your income. If your income is low enough, you pass automatically. If your income is higher, the court looks more carefully at your budget. If you have enough money in your budget the court might direct you to a Chapter 13 bankruptcy instead.
Most people with low incomes pass the means test.
Do I automatically qualify if my income is very low?
Yes. If your income is below the median income for your household size in Virginia, you automatically pass the means test. You do not need to do anything extra.
If you only receive SSI (Supplemental Security Income) or Social Security, you may automatically qualify.
What are the Virginia income limits?
Virginia uses median household income to set the limit. If your income is below the median for your household size, you automatically pass. These numbers change each year.
What if my income is above the median?
If your income is above the median, you might still qualify. The court looks at your actual budget. It compares your income to your necessary living expenses. The government uses national and local standards for those expenses.
If your expenses are high enough compared to your income, you may still pass the means test.
A bankruptcy lawyer can run the means test calculation for you. Many things that seem to disqualify someone actually don't when the full calculation is done. Do not assume you don't qualify before talking to a lawyer.
What if I am unemployed or only receive SSI?
If you are unemployed or only receive SSI or Social Security, you may not have to go through the full means test at all. The process may be simpler for you.
Can I file if I already filed for bankruptcy before?
Yes, you can file for bankruptcy even if you filed before, but there are waiting periods between filings. The time you must wait depends on what you filed before.
If you filed Chapter 7 before, you generally need to wait 8 years before filing Chapter 7 again.
If you filed Chapter 7 before, you need to wait 4 years before filing a Chapter 13.
If you filed Chapter 13 before, you need to wait 2 years to file another Chapter 13
If you previously filed a different chapter, see a lawyer for details on when you could next file.
Is there such a thing as too many assets to file?
There is no situation where you can have "too many” assets to file for bankruptcy at all.
If you have too many unprotected assets for Chapter 7 to be in your best interests, you can almost always file Chapter 13.
In Chapter 13, you keep your assets. You make payments to creditors over 3 to 5 years instead of handing over property.
In rare situations where someone has extreme debt and significant assets, Chapter 11 may also be available to an individual.
Where can I get help figuring this out?
If you are considering bankruptcy, it is better to consult with a lawyer first.
Free legal help may be available: Call 866-LEGLAID (866-534-5243) or visit virginialawhelp.org/get-legal-help to find a legal aid office in your area.
You can also search for a bankruptcy lawyer using the National Association of Consumer Advocates (NACA) tool: consumeradvocates.org/findanattorney. Under "area of practice," select "bankruptcy" from the drop-down menu.
What should I be aware of when hiring a bankruptcy lawyer?
Be sure to ask about all costs before you hire anyone. In Virginia, bankruptcy costs likely include a filing fee, a recording fee, and the lawyer's own fees.
Some lawyers quote only their own fees, without including court costs. Other lawyers quote the full package. The only way to compare prices fairly is to ask each firm for the full cost breakdown. That way you are comparing the same things.
Understanding the full costs is essential to making an informed decision.
For information on how to select a bankruptcy lawyer and how to prepare for your first meeting, see the NCLC’s “Surviving Debt” guide.