You could live in St. Croix, St. John, or St. Thomas, but no matter the island, the U.S. territory of the Virgin Islands is an idyllic place to live. Year round sun, tropical breezes, and luscious flora and fauna make the Virgin Islands seem like a dream place to live.
A dream is quickly shattered when the realization of bills, debt, and creditor harassment infringes on the enjoyment of your daily life. As bills continue to mount, more troubles arise; your property and vehicles could be repossessed, creditors start calling and arriving on your doorstep, and your quality of life significantly diminishes. It’s hard to see the beauty of the Virgin Islands when you are surrounded in debt.
There is hope for all residents suffering from the weight of debt in the Virgin Islands. A Chapter 7 bankruptcy can free you from nearly all of your debt, allowing you to start over with a clean financial slate. It’s not difficult, and with the right legal representation, the process is quick and painless.
What Will a Chapter 7 Bankruptcy do For You?
Chapter 7, also known as a “straight” or liquidation bankruptcy, allows debtors to liquidate their debts, while keeping nearly all of their most important assets and property. The Bankruptcy Reform Act of 2005 protects debtors from losing all of their property, but maintains a standard where each individual filing must pass certain requirements to file.
The first step in deciding to file for Chapter 7 is to meet with a qualified Chapter 7 bankruptcy attorney. An attorney will not only explain the details of the legal process, he or she will walk you through it, making the process as simple as possible. A bankruptcy can dismiss the following types of debt:
- Credit card bills
- Medical bills
- Old tax liens
- Personal loans
- Garnishments and judgments
While a bankruptcy can get rid of most of your debt, there are few debts that any type of bankruptcy, Chapter 7 or otherwise cannot dismiss. These include:
- School loans
- Child support payments
- Alimony payments
- Debts resulting from embezzlement or fraudulent charges
A Chapter 7 bankruptcy typically takes 6 months to complete from the time you have an initial consultation, until you receive your discharge papers in the mail. You will be required to attend a short hearing, called a “Meeting of Creditors” where a representative of the creditors called a Trustee may ask you a couple of brief questions.
Get Started By Qualifying for a Bankruptcy, Chapter 7
Now that you know the bankruptcy process, what’s the next step? All Virgin Island residents must either fall at or below the average income level for their given family size or pass the means test. The median income level can change from year to year, so it’s important to check with your bankruptcy attorney for the most current data.
The Virgin Median Income Level based on Family size:
- 1 individual: $28,943
- 2 people: $34,786
- 3 people: $37,090
- 4 people: $40,636
- More than 4 people: Debtors are required to add $7, 500 per person
If you make more than the average for your family size, no need to worry, because you still may qualify with the mean test. A mathematical method determining your debt to asset ratio, the means test can be performed during your initial consultation with your bankruptcy attorney. If you exceed the ratio in the means test, you may be able to file for a Chapter 13 bankruptcy. Your attorney will suggest the best course of action in the event that your income levels do not qualify you for a Chapter 7.
Keep Your Piece of Paradise
A common myth about Chapter 7 bankruptcy is that you will be able to lose your debt, right along with all of your assets. Specific laws prevent that from happening however, making the choice to file bankruptcy an even easier one. Additionally, Virgin Island residents are allowed to choose between federal or territorial exemptions, which make customization of the bankruptcy petition ideal for those with a large amount of assets.
Some of the territorial exemptions for the Virgin Islands include:
- Homestead exemption: $30,000
- Household goods:
- 100% Wearing apparel except watches and jewelry
- 100% Tools of the trade or profession
- 100% Tools of the trade or profession
- $3,000 of household goods and furnishings
- Insurance:
- 100% Disability insurance proceeds
- 100% Life insurance proceeds
- 100% Group life insurance proceeds
- 100% Crop insurance proceeds
- Benefits:
- 100% Government employee retirement benefits
- 100% Workers compensation
- 100% Unemployment compensation
- 100% FEMA benefits exempt from garnishment
- 100% Federal civil service disability and death benefits
- 100% Federal civil service retirement benefits
- 100% Military Survivor Benefit Plan annuities
- 100% ERISA benefits
- 100% Public safety officers' death benefits
- 100% Railroad employees’ retirement and disability annuities
- 100% Social Security benefits
- 100% Veterans Administration benefits (includes pensions, life insurance and disability benefits)
- Additional exemptions:
- 100% Medal of Honor exemption (special pensions for persons on Army, Navy, Air Force or Coast Guard Medal of Honor roll
- 100% Interests in pension or profit sharing plans--CIA Employees
- 100% Annuities paid to widows and dependent children of Federal Justices and Judges
A Chapter 7 bankruptcy filing can have a dramatic and positive impact on your life. You should not have to waste years of your life paying debt that only increases with mounting interest rates. Contact a local bankruptcy attorney today to find out how you can go back to absorbing the beauty your slice of paradise in the Virgin Island offers.