A Chapter 7 Bankruptcy is often referred to as a "Fresh Start" Bankruptcy since the majority of your debts will be discharged or wiped out. However, the technical name for a Chapter 7 Bankruptcy is a liquidation bankruptcy. When you file a Chapter 7, the Court appoints an individual, called the trustee, whose job is to see if you have assets that they can sell or liquidate to help pay your creditors. Many people only think about real estate when they think of assets but it is much broader than that. Anything that you own or may be entitled to is an asset and could be liquidated to help pay for your creditors. However, the law allows you to protect or keep certain assets through what are called exemptions. The exemptions you are entitled to use is based on where you have lived for the last two and a half years.
If you have lived in Virginia continuously for the last two full years, then you will use Virginia laws to protect your assets. Under Virginia laws, there are specific exemptions for several different things, such as clothing, household goods, a car, a firearm and personal injury proceeds to name a few. Some of these exemptions have a limit on the dollar amount that can be protected and some are unlimited. There is also what is referred to as the wild card exemption which can be used for any asset that does not have a specific exemption, like money in the bank, tax refunds or a second car. However, there is a lifetime cap on the wild card exemption. If you file a Chapter 7 bankruptcy more than one time in Virginia, you may have problems in the later cases due to that life time cap. There are also strict procedures that must be followed to protect your assets in a Chapter 7 bankruptcy. If you do not follow these procedures, you can end up losing your ability to protect assets under the wild card exemption.
This is not something that you should attempt to do on your own. I have seen many individuals who have lost thousands of dollars because they did not understand how to protect their assets. Before you attempt to file a Chapter 7 Bankruptcy, you should consult an experienced bankruptcy attorney. Contact Hampton Roads Legal Services at 757-320-210 and we will schedule you a free consultation to explain how bankruptcy can help you and allow you to keep your assets.