Bankruptcy represents a longstanding commitment in this country to helping people get a fresh start. (Representative Jim Cooper – TN)

Greenwood Law Firm services the Alexandria and Richmond Divisions of the U.S. Bankruptcy Court for the Eastern District of Virginia, and the Lynchburg and Charlottesville regions of the Western District.

Greenwood Law Firm is a federally designated debt relief agency. We help debtors obtain relief and discharge from their debts under federal bankruptcy laws.

Bankruptcy is governed by the United States Bankruptcy Code. However, the exemptions that may allow a debtor to keep certain items of personal property and possibly real estate are governed mostly by Virginia Homestead Exemption Laws. The general goals of bankruptcy are to provide the debtor a fresh financial start and to distribute payments equitably among the debtor’s creditors.

Greenwood Law Firm will help you determine the type of bankruptcy petition for which you qualify and which will best fit your needs. Contact Greenwood Law Firm for a consultation.

Bankruptcy Petition Types*

Chapter 7

Commonly known as a “liquidation” bankruptcy.
A trustee is appointed to identify and liquidate non-exempt property contained within the debtor’s bankruptcy estate for the benefit of creditors. Any non-exempt assets will be sold or turned into money to pay the debtor’s creditors. The debtor may be able to keep many personal items and possibly real estate in accordance with applicable state and federal laws.

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• To file a chapter 7 petition without raising a presumption of abuse under federal law, the debtor must qualify through a process commonly and collectively known as the “Means Test.”
• Means testing is based on a debtor’s average monthly income for the (6) months preceding the filing of the bankruptcy petition.
• The first step, or “median test,” compares the debtor’s Current Monthly Income (CMI) to the state median income for a household of the same size. If the debtor’s CMI is at or below the state median for the same household size, the debtor, in effect, qualifies to file a chapter 7 petition. If the debtor’s CMI is above-median, the debtor may still file a chapter 7 petition, but the debtor must first undergo the “complete means test.”
• The second step, or “complete means test,” calculates a debtor’s Disposable Monthly Income (DMI) by subtracting IRS allowances for certain living expenses together with contractually required secured debt payments. The debtor’s DMI is then compared to set statutory amounts to determine whether a chapter 7 presumption of abuse arises under federal law.
• There are potential exclusions from means testing for disabled veterans, and reservists and National Guard members who performed active duty service or homeland defense during certain time periods.

Greenwood Law Firm is ready and able to guide you through the complexities of this process. Contact Greenwood Law Firm for a consultation.

Chapter 13

Commonly known as a “reorganization” bankruptcy.
The debtor must have some source of regular income and the debtor agrees to pay part of that income monthly to his/her creditors through a chapter 13 plan. The chapter 13 debt repayment plan must be approved by the Court and will span either (36) months or (60) months depending upon the income level of the debtor. A trustee is appointed to collect the monthly plan payments from the debtor and to distribute the funds among the debtor’s creditors according to a hierarchy of priority determined by the U.S. Bankruptcy Code.
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• A chapter 13 bankruptcy is the preferred option by which to preserve assets, such as one’s home, which would otherwise be subject to liquidation in a chapter 7 case.
• A chapter 13 bankruptcy is also an option for a debtor whose income level exceeds the acceptable DMI under the Means Test formula.
• In a chapter 13 case, the debtor usually keeps all of his / her property.

Greenwood Law Firm is ready and able to guide you through the complexities of filing a chapter 13 bankruptcy petition and debt repayment plan. Contact Greenwood Law Firm for a consultation.

*There are two types of bankruptcy petitions in addition to Chapter 7 and 13 petitions.  Chapter 12 bankruptcy is similar to chapter 13, but only applies to family farmers and fisherman; chapter 11 bankruptcy is a reorganization used mostly by businesses that allows the business to continue to operate but only upon the Court approval of a plan to repay the company’s debts.