Types of Bankruptcy: Chapter 7, Chapter 11 & Chapter 13 Bankruptcy in Lynchburg, VA and Danville, VA

Bankruptcy is a legal process governed by federal rules and procedures contained in the Bankruptcy Code and the Bankruptcy Rules. The primary purpose of bankruptcy law is to provide a debtor with a "fresh start" through which some debts can be paid, restructured or discharged. Bankruptcy also provides a way for creditors to be treated fairly and equitably. The debtor is the person who owes money, goods or services and the creditor is the person to whom the money, goods or services is owed. 

In a Chapter 7 liquidation case, sometimes referred to as "straight bankruptcy," a trustee is appointed to collect and liquidate the debtor's non-exempt assets (see below for an explanation of "non-exempt assets") and to pay proceeds to creditors in the order set forth in the Bankruptcy Code. Most of the cases we see of Chapter 7 bankruptcy are "no asset" cases. This means  that the debtor does not have sufficient non-exempt assets of sufficient income to make any distribution to unsecured creditors.

Chapter 11 is available to individuals and business who seek to reorganize their affairs or to liquidate in an orderly manner. In Chapter 11, the debtor remains in control of his property and operates as a "debtor in possession" subject to bankruptcy court supervision. In Chapter 11, the debtor is allowed a certain period of time within which to propose a plan of reorganization. The plan of reorganization sets the terms for payment of the debts. The terms of Chapter 11 plans vary depending on the nature of the debt or the type of business the debtor operates, and creditors usually will vote to approve or object on the proposed plan.

Chapter 13 bankruptcy is available to individuals with regular income who owe secureded and unsecured debts. By choosing Chapter 13, an individual debtor may avoid a Chapter 7 liquidation, stop home mortgage foreclosures, reinstate defaulted home mortgages and obtain a broader discharge of debts than is available in a Chapter 7 liquidation. In exchange, the debtor in a Chapter 13 case must repay unsecured creditors a portion of their claims from the debtor's future income over a three to five year period. Ordinarily, payments to creditors will be made by the Chapter 13 Trustee according to the plan filed by the debtor and approved by the bankruptcy judge. 

Whether you need help filing for Chapter 13, Chapter 11, or Chapter 7 bankruptcy, you may schedule a free consultation through our website or by calling our office. When you come for your appointment, you will be asked to bring some information with you (please see the documentation tab above). This information will help the attorney to advise you more accurately on your options.

At your consultation, you will first meet with a legal assistant who ask you some questions and will enter your information into our bankruptcy program. After this is done, one of the attorneys, either Stephen Dunn or Michelle Dunn, will meet with you to discuss your options for filing bankruptcy. If you decide to file, we will schedule a signing appointment and give you a list of additional documents that the court requires and that you will need to bring to your signing appointment.

In all bankruptcy cases, the court schedules at least two hearings. The first hearing is called a Meeting of Creditors (also called a 341 hearing) where you meet with the Trustee that has been assigned to your case. He will review your bankruptcy petition and will ask you questions in regards to your case. Your attorney will be with you at that hearing.

The second hearing is called a confirmation hearing. This is when the Trustee and the court approve your bankruptcy plan. In most cases, you will not have to appear at a second hearing.