Virginia Bankruptcy

Through bankruptcy, individuals or businesses struggling with debt can seek relief or a structured plan to manage and discharge their debts. In Virginia, bankruptcy proceedings are governed by federal law, but the state dictates what property can be kept during a case. In other words, bankruptcy filers in Virginia must rely on the state's exemptions rather than the federal exemptions.

Regardless, certain federal protections can still be applied during a bankruptcy case. Some of these include Social Security benefits, veterans' benefits, and other federal non-bankruptcy exemptions. Filers may retain essential property while addressing their debts through Chapter 7 or Chapter 13 bankruptcy by combining these state and federal non-bankruptcy exemptions.

How to File Bankruptcy in Virginia

Before you file your bankruptcy petition in Virginia, you must complete a credit counseling course with an approved provider within 180 days. The course may help you evaluate your financial situation and explore other alternatives to filing for bankruptcy. In the next step, you should carefully collect essential financial documentation like a comprehensive list of creditors, pay stubs, recent federal tax return, bank statements, and a detailed inventory of all your assets.

After completing the official bankruptcy forms, it is important that you certify the information provided under penalty of perjury. Based on your county of residence, you must file your case in the correct U.S. Bankruptcy Court for Virginia. In addition, you must pay the applicable filing fees or request a fee waiver from the court. It is worth noting that the waiver is not automatic and may not be granted by the court.

Approximately a month after filing, it is important to attend the 341 meeting of creditors that will be organized by your trustee. This meeting is to verify that all the information you have provided to the court is accurate. Before your debts can be discharged, you must complete a financial management course from a provider approved by the U.S. Trustee Program.

Virginia Bankruptcy Types: Chapter 7, Chapter 13 & Chapter 11

The different types of bankruptcy cases in Virginia include:

Chapter 7

When an individual qualifies to file for Chapter 7 bankruptcy, the court-appointed trustee collects and sells any property that is not protected under Virginia’s exemption laws. The proceeds from these sales are then distributed to creditors according to the priority set by federal bankruptcy rules. In some cases, the trustee may also sell property that is subject to a lien if there will be enough money left over after the sale.

Chapter 13

Chapter 13 bankruptcy is generally intended for individuals, including married couples, who have a steady income and meet the debt limits for unsecured debts under $526,700 and secured debts under $1,580,125. Through this chapter, filers can prevent mortgage foreclosure, reduce the total amount owed, and extend the payment period. In return, the filer pays a portion of their debts over a 3 to 5 year-period using their future income.

Chapter 11

Individuals and businesses can reorganize their affairs by filing Chapter 11 bankruptcy. In this case, the debtor is subject to court supervision while they act as a “debtor in possession.” In other words, the debtor can still operate their business while they propose a plan to repay the debts.

Steps in Filing for Bankruptcy in Virginia

While it is recommended to consult a bankruptcy attorney, the following steps outline the general procedure for filing a case in Virginia:

• Complete a credit counseling course within 180 days before filing
• Gather financial documentation
• Fill out official bankruptcy forms
• Certify your information under penalty of perjury
• File in the correct Virginia bankruptcy court
• Pay the filing fees or request a fee waiver
• Attend the 341 meeting of creditors
• Complete the financial management course

Virginia Bankruptcy Courts & Record Access

Virginia has a dual bankruptcy court system, divided into Eastern and Western Districts that each serve different regions of the state.

Eastern District of Virginia – It hears bankruptcy proceedings for counties and cities like Hampton, Isle of Wight, Alexandria, Accomack, Caroline, New Kent, and Manassas. The divisional offices are located at:

• Alexandria

• Norfolk

• Newport News

• Richmond

Western District of Virginia – This court covers the western part of the Commonwealth of Virginia including counties and independent cities. The divisional offices are located at:

• Roanoke

• Harrisonburg

• Lynchburg

You may view documents in your bankruptcy case through the Public Access to Court Electronic Records (PACER) system at $0.10 per page, or by using the public access terminals available in the courthouses. To request copies, you may submit a written request to the appropriate divisional office where your case was filed.

Your request should include key case details such as the case number, debtor’s name, and a description of the specific documents you need. Additionally, divisional offices may assist in retrieving case files that have been transferred to the Federal Records Center upon request.