Many people in Virginia and the United States owe high levels of credit card and other forms of personal debt. The situation only worsens when borrowers start defaulting on their payments due to a lack of steady income.

As a result filing bankruptcy in VA has become an option for mamy people to eliminate this debt. Virginia bankruptcy laws allow debtors to discharge many of their debts provided they qualify.

There exist two types of debts, i.e. personal and business debts, and each is treated differently when it comes to collections and bankruptcy in Virginia.

This article covers a wider aspect of Personal Debts and ways to expunge them through a Virginia Bankruptcy Filing.

Personal debt covers all the debts owed solely by the individual. However, in some cases, it includes the involvement of more than one party, such as a co-signor. Personal debt comprises both secured and unsecured debts.

What are the major types of personal debts and how are they treated in bankruptcy?

1. Credit Card: Sometimes Unsecured Can Make You Feel More Secure

Credit card debts usually falls under the category of Unsecured Debts provided you didn’t use your property or assets as collateral. Therefore, it's less likely to lose your property or assets if you default on the payment.

However, creditors often hire debt collection agencies or law firms to retrieve the payment from those that default. Moreover, creditors can force you to make payment by filing a lawsuit or warrant in debt against you and garnishing your wages or placing a lien on your property.

How to Discharge the Debt?

You can easily get rid of your credit card debts through Filing a Chapter 7 Bankruptcy in Virginia. Under this chapter, your debt will go away soon after the completion of your case, provided you were not involved in any kind of fraudulent activities.

2. Student Loan: Federal Student Loan or A Trap?

A student loan comprises a contract three party: the borrower, the lender and state contract laws. These loans are given by a private lender to the borrower.

However, most student loans often come federally subsidized, which makes the federal government its ultimate guarantor. In the USA, the rate of Student Loan defaults has surpassed the figure of credit card defaulters.

Under Virginia bankruptcy law, it is nearly impossible to get student loan discharged.

How to Discharge the Debt?

You cannot discharge a federal student loan on the ground of receiving an inferior education or being unable to attain a job. With federal loans, you cannot apply the defense of infancy or laches.

However, some private loans are subjected to these defenses, but the statute of limitations varies based on your state.

A Virginia bankruptcy lawyer can help you determine how to best deal with student loans.

3. Mortgage Loan Debt and Other Secured Debt: Better Safe Than Sorry

Most people do not have the financial resources to pay for a house or vehicle in full upon purchase. As a result, they often borrow money from a secured lender to finance the purchase. In exchange, the borrow agrees to repay the loan with interest and provides the creditor with a security interest in the property they purchased. This security interest means the creditor can repossess or foreclose on the property if the borrower defaults.

A Mortgage loan is one type of secured loan, and your house serves as collateral for the loan. In Virginia, a mortgage is called a "Deed of Trust". In almost any purchase of real property, the bank that lends you the money will have you and any other owner sign a "Deed of Trust" which grants them the security interest in your house.

How to Discharge the Debt and Retain Your Property?

There are two ways to discharge your debt through Bankruptcy in Virginia.
If you file a chapter 7 bankruptcy, then you must be completely current with your mortgage payments before and after filing for bankruptcy. You should also consult with a Virginia bankruptcy lawyer before filing a Chapter 7 bankruptcy when you have real estate, as it could be taken by the trustee and sold in order to pay your creditors.

If you are substantially behind on mortgage payments, you can file under Chapter 13 bankruptcy in Virginia. In chapter 13, you can enter into a three to five-year plan to pay your mortgage arrearages.

4. Medical Debt: Two Ways to Wipe Out the Debt

It rarely happens that insurance has covers an entire medical bill, and in these cases, it’s the consumer who has to cover the rest. For some patients, their portion of the payment is too much to handle.

Furthermore, the unavailability of long term payment plans in many medical facilities pushes the burden of the customer even more. As a result, your bills often end up falling into the hands of a debt collection agency.

How to Discharge the Debt?

As medical bills are usually unsecured debts, filing bankruptcy in Virgina can easily wipe them out. Based on your eligibility, you can file under either Chapter 7 or 13.

5. Tax Debt: You Can’t Get Away with Everything, or Can You?

Tax debts refer to unpaid taxes, which an individual with an income is liable to pay to the federal or state government.

The government can collect these taxes by garnishing your wages or levying your property. As a debtor, you can set up a payment plan with the Internal Revenue Service to completely eliminate your debt.

How to Discharge the Debt?

Most tax debts cannot be discharged in bankruptcy. In some cases, however, older income tax debts can be discharged. Other federal taxes like payroll taxes or fraud penalties are unavoidable under Virginia Bankruptcy law.

Regardless of your current debt scenario, you must approach a Virginia bankruptcy lawyer to weigh your options and find the ideal solutions to get yourself out of your predicament.

Related - Dischargeability of Tax Debt

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Hopefully this article explained enough tricks that you can deal with your Personal Debts. But if you still have any other questions please contact us for a free consultation.

Note: This article is only for informational purpose. We recommend you consult a professional Virginia Bankruptcy Attorney if considering filing Bankruptcy in Virginia.

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