In Virginia, as is the case across the United States, medical bills are the root cause of approximately 50 percent of all consumer bankruptcies. About 25 percent of Virginians seek bankruptcy relief primarily because of medical debt; the remaining 25 percent seek this judicial relief because of bankruptcy and credit card debt.
If you face what seems to be insurmountable debt you may be considering filing for bankruptcy in the Commonwealth of Virginia. If so, it's important to have a basic understanding of the laws surrounding filing for and obtaining bankruptcy relief in Virginia.
Consumer Finance Education
In the mid-2000s, the Bush Administration and Congress enacted legislation that significantly revamped the U.S. Bankruptcy Code. This impacted the manner in which consumers obtain bankruptcy relief in Virginia and the other states in the country.
One of the more significant changes centered on Chapter 7 bankruptcy cases. These are bankruptcies in which a consumer is discharged or relieved of all or most of her existing debt. These are also the most common type of bankruptcies filed in the U.S.
In Chapter 7 bankruptcy cases, before a consumer actually initiates such a legal action, he or she must go through a course of consumer debt education provided by a nonprofit debt counseling agency. The Clerk of the Bankruptcy Court in Virginia can provide you with a list of approved agencies that provide this type of debt counseling that is mandatory in advance of filing for bankruptcy.
Proof of Claim Forms to All Creditors
Pursuant to applicable bankruptcy laws in Virginia, one of the key steps a person seeking this type of financial relief must take is the provision of proof of claims forms to all creditors. A proof of claim form serves two purposes. First, it provides a creditor with notification that you are seeking bankruptcy relief. Second, it allows a creditor to file a claim with the court in regard to the debt that you owe to that particular creditor.
Your responsibility in this instance is to ensure that you provide the court---when filing your bankruptcy petition---with the name, address, balance due and account number for each creditor to which you owe money. You must include all creditors on this list, not just your medical creditors.
Another major step when seeking bankruptcy on medical bills in Virginia is what is known as the "creditors' meeting." After you file for bankruptcy, the court will schedule a creditors meeting. The creditors' meeting is a session in front of the bankruptcy court trustee. Any creditor can appear at the meeting, including those medical service providers to which you are in debt.
Chapter 13 Resolution
If you file a Chapter 13 bankruptcy case in Virginia, the ultimate resolution of the case is the development of a payment plan. The trustee, after determining your overall debt, will decide how much you can afford to pay into the court to pay off the bankruptcy plan over time. The trustee will then set the amount each individual creditor will be paid each month from your own comprehensive payment.
Chapter 7 Resolution
If you file a Chapter 7 bankruptcy case, the ultimate resolution of your case will be a general discharge of your debts, including the amount of money you owe on medical bills. When this occurs, you will no longer be responsible for paying money to these creditors. You are provided something of a clean slate when it comes to your financial situation and accumulated debt.
- Photo Credit Jynmeyer, Everystockphoto.com
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