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Virginia court rejects former politician's Chapter 13 bankruptcy plan

A Chapter 13 bankruptcy plan filed by an ex-Virginia politician has been rejected by a federal bankruptcy judge on the trustee's advice that the plan was unworkable. A former Virginia delegate has until mid-August to come up with a new debt reorganization proposal. The deadline falls a week after he goes on trial for extortion and bribery.

The former politician and his wife filed for Chapter 13 bankruptcy protection in February. Under the dismissed plan, the couple agreed to repay a portion of what they owe 20 creditors over a five-year period. The bankruptcy trustee told the judge that the couple may not be in a position to pay that debt. The wife is not employed, and the man could lose the opportunity to earn one, if he is convicted of alleged crimes in federal court.

Under the initial bankruptcy plan, the couple wanted to pay approximately $74,000 to creditors in a graduated payment plan that started with monthly payments of $375 and increased to more than $1,300.

Among the creditors waiting for money are the state of Virginia and the Internal Revenue Service, owed $1,000 and $4,000 respectively. The planned payments would have amounted to just 3 percent of what the couple is said to owe - $600,000.

The bankruptcy judge agreed with the trustee's assessment and granted the couple 21 days to revise the plan.

As this case shows, bankruptcy can be a complicated and complex process. However, it can be a good option for some people who have found themselves deep in debt. If you are considering bankruptcy, speaking to an experienced bankruptcy attorney may be helpful in creating a plan that will work for you.

Source 2: Daily Press, "Judge rejects Hamilton's bankruptcy plan," Peter Frost, July 28, 2011

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