Bankruptcy can offer a fresh beginning to people who are experiencing severe financial pressure. Debtors with substantial unsecured debt can file a Chapter 7 bankruptcy, which liquidates their assets while discharging most, if not all, of that debt. Most assets are protected from creditors' claims. A Chapter 13 bankruptcy is a reorganization plan that pays creditors back. Chapter 13 can protect assets, or equity in assets, that might otherwise not be protected in a Chapter 7.
While bankruptcy is a federal right, regulated by federal law, there are state-specific laws that residents need to know.
Filing in West Virginia
Depending on where you live, you can file a bankruptcy petition in either the Northern District of West Virginia of the United States Bankruptcy Court, with courts in Wheeling and Clarksburg, or you can file in the Southern District of West Virginia, with courts in Charleston, Beckley and Huntington. Check the court's online website for more information.
Chapter 7 Eligibility
Filing a Chapter 7 bankruptcy depends on your average monthly income. If you earn less than West Virginia's median income, you're eligible to file Chapter 7. If your average monthly income is equal to or greater than the state's median income, you can't file Chapter 7 unless you can pass a means test.
How long your Chapter 13 repayment plan lasts depends on your average monthly income. If it's less than West Virginia's median income, your Chapter 13 plan can't exceed 36 months unless the court agrees there's good cause to extend it up to 60 months. If your average monthly income is equal to or exceeds the state's median income, your Chapter 13 plan is usually 60 months long.
What Happens to My Assets?
You are allowed certain exemptions, items of personal and real property that are protected from creditors' claims and which you can keep in bankruptcy. West Virginia has its own list of exemptions, and it's an opt-out state. It doesn't allow you to use federal exemptions instead. State exemptions include the following:
- Homestead equity
- Household furniture, clothing and jewelry
- One vehicle
- Burial plot
- Tools of your trade
- Tax-exempt retirement accounts
- Unemployment, workers' compensation and welfare benefits
- Life insurance proceeds
- Certain amount of wages
- Wildcard for any property
State-specific exemptions include:
- Homestead exemption is $25,000, and double that for married couples. You can apply any unused portion of the homestead exemption to other property that you'd like to protect.
- Motor vehicle exemption is $2,400
- Tools of the trade is $1,500
- Burial plot exemption up to $25,000 in lieu of homestead
- A wildcard exemption of $800 can be applied to any other property, along with the unused portion of the homestead or burial exemptions.
If you've been a state resident for at least 91 days but less than two years, you must use the exemptions of the state where you lived for the better part of the 180 days immediately preceding the two-year period before you file.
A Personal Bankruptcy Attorney Can Help
As state bankruptcy laws are complicated, please contact a West Virginia bankruptcy lawyer.