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Woman facing bankruptcy

When Do You Need to Declare Bankruptcy?

Trust Wilson C. Pasley PLC to Help You File for Bankruptcy

When do you need to declare bankruptcy? When people hear the word “bankruptcy,” they may think of total loss and empty pockets. However, bankruptcy can get you back on the right track with your personal finances. While getting out of debt may seem like the answer to all your problems, there are some important things to keep in mind when planning for the future. In this blog, Wilson C. Pasley PLC in Roanoke, VA, will take a look at some of the intricacies of bankruptcy. Our blog focuses on what you can do to help yourself now and in the future.


Determining Which Part of the Bankruptcy Code to File Under

Wilson C. Pasley represents clients in Chapter 7 and Chapter 13.  Our attorney also assists clients in Chapter 11 cases. When you file under these codes, you can end a lot of financial woes like eliminating credit card debt, removing medical debt, stopping wage garnishment, and ending creditor harassment for payments. Before you file for chapter 7 bankruptcy, you will have to pass a financial means test. This test determines if your income falls below a certain level. If it does, you will automatically qualify for chapter 7 bankruptcy.


Chapter 13 bankruptcy is a little different than chapter 7. In this case, you do not have to pass the financial means test. Chapter 13 bankruptcy allows you to create a structured debt repayment plan that lasts three to five years. After you complete your repayment plan, most nonpriority debt is forgiven. Filing under chapter 13 bankruptcy can be useful for saving your home from foreclosure, catching up with past-due mortgage payments, avoiding car repossession, and more. Both types of bankruptcy can get you out of debt, but there some important details that cannot go unnoticed.


On the Way to Getting Out of Debt

Filing for bankruptcy can have lasting effects on your credit score and your ability to take out a loan and other major financial transactions. According to Experian, one of the three major national credit bureaus, declaring bankruptcy has the greatest single impact on credit scores. It may also make you appear to be a risk to companies that request your report, including other lenders, insurance companies, and potential employers.

There are limits on how often you can have your debts eliminated through bankruptcy. For example, if you have had debts discharged through a chapter 7 bankruptcy, you must wait eight years before you can file for bankruptcy again. When you file under chapter 7 or chapter 13 bankruptcy, the filing will stay on your credit report for 10 years and seven years, respectively.



At Times, Filing for Bankruptcy Might Not Be the Answer

Before filing for bankruptcy, it might be worth checking in with your creditors to see if they are willing to negotiate on payment amounts and payment plans. Many lenders have programs for people who are having trouble paying off their mortgage or car loans.


For more information on filing for bankruptcy, give Wilson C. Pasley PLC a call at (540) 266-1545. Like us on Facebook to stay up-to-date with the latest news and information. We are happy to answer the question, “When do you need to declare bankruptcy?”