Filing Chapter 7 Bankruptcy Becomes More Difficult in Northern VA

Here is a recent press release about my firm: Fairfax bankruptcy attorney Beeraj Patel practices Chapter 7 bankruptcy with years of experience working within the Eastern District of Virginia. The Eastern District of Virginia includes the entire Northern Virginia area. According to the Eastern District bankruptcy courts, 2013 Chapter 7 filings in Northern Virginia were significantly lower than 2012. However, Mr. Patel asserts that these numbers illustrate a less obvious trend of stricter bankruptcy regulation enforcement.

Eastern District of Virginia’s Bankruptcy Courts’ records show a decrease in successful Chapter 7 filings from the year 2012 to the year 2013. Chapter 7 bankruptcy cases in the Eastern District of Virginia dropped from 14,204 to 11,297 – a 20.5% drop in filing Chapter 7 bankruptcy. Some may assume that less people are interested in filing for Chapter 7 Bankruptcy, however, Mr. Patel offers an alternative viewpoint. Mr. Patel states, “Although it is certain there has been a drop in Chapter 7 filings, there are other trends that are less apparent. Chapter 13 cases are increasing and now make up a larger portion of all bankruptcy cases filed in the Eastern District.”

According to the 2012 Report of Statistics Required by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the amount of Chapter 13 cases between the years 2011 and 2012 increased nationwide. Additionally, Eastern District of Virginia Bankruptcy court records show the percentage of Chapter 13 cases filed in the Eastern District of Virginia increased from 36% in 2012 to 38% in 2013. These figures affirm Mr. Patel’s statement that Chapter 13 bankruptcies are now making up a larger portion of cases filed.

In response to the shifting bankruptcy filing trends, Mr. Patel made the statement, “Many individuals want to file Chapter 7 bankruptcy and have all their consumer debts liquidated. Unfortunately for many individuals, there are instances where filers do not meet the requirements for Chapter 7 Bankruptcy, forcing them to drop their case or move towards a Chapter 13 plan which restructures debts instead of discharging debts.” He went on to state, “The success of a Chapter 7 petition can boil down to the correct interpretation of a comprehensive income assessment form known as the Means Test which frames a filer’s income and expenses. This interpretation can present a challenge for the filer and inexperienced bankruptcy attorneys. Ultimately, when Chapter 7 cases do not qualify under VA guidelines and district courts enforce regulations more strictly, filers are pushed into a Chapter 13 petition which is not desirable.”

Mr. Patel reminds individuals thinking of pursuing Chapter 7 bankruptcy in 2014 be discerning when selecting a bankruptcy lawyer and to research their experience.

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  1. […] The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was signed into law on April 20, 2005 with most provisions set to take effect on October 17, 2005. BAPCPA had a large impact on how bankruptcies would be filed in the United States including implementing a new means test to determine if debtors were eligible to file for relief under Chapter 7 or if they would be required to file a Chapter 13 bankruptcy to repay some or all of their debts. It provided for more oversight by the U. S. Trustee’s Office including random and targeted audits as well as requiring all debtors complete required courses in credit counseling and financial management. Prior to the enactment of BAPCPA, debtors could file bankruptcy without the necessity of submitting to required credit counseling and their discharge was not dependant on them completing a financial management course. Many debtors and bankruptcy attorneys objected to this provision of the Act; however, Congress passed the Act including the provisions and now debtors must complete the required courses if they wish to file for bankruptcy relief and obtain a bankruptcy discharge. […]

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  3. […] Although in a bankruptcy case the courts wish to fulfill the debts owed to the creditors, there are now cases which can be deemed as completely “non-exempt” cases. This means that the courts have found there are no considerable non-protected assets worth seizing and selling on behalf of the creditors involved. Although these new attributes may make chapter 7 seem like an irresistible option, there are guidelines protecting it from being abused by those looking to take advantage of the system in place. In 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was passed which made it more difficult to declare chapter 7 debt. This act also allowed for more transparency in the bankruptcy court system and regularly provides valuable statistics that record how many and what types of filings are occurring and when. To read more about this, click here. […]