West Virginia Bankruptcy Laws: What are the Laws Regarding Bankruptcies in the State of West Virginia
The U.S. federal court governs the bankruptcy laws of a state, but each state has its framework of laws that work in conjunction with the laws set by the federal court. The state’s framework of laws is more lenient than the federal court’s and is used to protect some or most of an individual’s assets. Individuals filing for bankruptcy from West Virginia are expected to follow the following laws which include laws that must be followed before, during, and after being declared bankrupt.
West Virginia bankruptcy laws before filing for bankruptcy
The individual can file for bankruptcy from West Virginia only if he has lived in the state for 40 months.
The individual must first undergo counseling within six months of filing for bankruptcy. The counseling must be approved by a U.S. bankruptcy trustee in West Virginia.
The individual must provide proof of credit counseling. The state must approve the credit counseling.
West Virginia bankruptcy laws for after filing for bankruptcy
After filing for bankruptcy, the individual must undergo a financial management institute course that has been approved by the state.
The individual can only make use of state exemptions and not federal exceptions – however, some exceptions have been detailed below.
Chapter 7 exemption laws of West Virginia
According to the homestead exemption, the individual's equity in the property is protected. The individual can maintain any property required to maintain his home and business.
Chapter 7 cannot protect the individual from any non-exempt property mortgage or automobile loans that have not been paid for. If the individual has not regularly kept up with his mortgage and other loan payments, the non-exempt property and automobiles will be sold. Once sold, the lease will be paid off. The amount of the homestead exemption will be reimbursed to the individual, and remaining proceeds will be used to pay any fees attached to the case, as well as all unsecured creditors.
Chapter 13 exemption laws of West Virginia
An individual can retain his non-exempt property after paying the amount equal to that property through the repayment plan.
The individual is expected to pay off the debt amount agreed upon within three to five years – depending on the plan that has been agreed on.
If the individual does not have the necessary income required to pay off his debts, the judge has the power to reject the new repayment plan altogether.
West Virginia means test
West Virginia means test will not apply to an individual whose income is lower than the income of the average family (of the same size) residing in West Virginia.
The individual must pass the means test if his income is higher than the income of the average family (of the same size) residing in West Virginia.
The means test will decide if the individual’s income is sufficient enough to pay off some of his incurred debts; and if he can, how much must be paid back to unsecured creditors.
Individuals who have incurred non-consumer debts and disabled veterans who ran into debt during active duty are exempted from the means test.
Federal exemptions in West Virginia
While the state of West Virginia does not allow individuals to avail federal exemptions, there are certain instances when an individual can place a request to avail federal exemptions on benefits such as retirement benefits including but not limited to social security, veterans’ benefits and medal of honor benefits, death and disability benefits, Klamath Indian tribe benefits, and survivor’s benefits.