Get Your Financial Fresh Start Today Through Bankruptcy
What is Bankruptcy?
Bankruptcy is a legal process where individuals or businesses that declare they are unable to pay outstanding debts can get a fresh financial start. Bankruptcy is a right provided by federal law, and all bankruptcy cases are handled in federal court. In most cases, filing bankruptcy immediately stops your creditors from taking any action against you or your property, giving you some breathing room to sort out your various debts according to the law.
What Can Bankruptcy Do For You?
Bankruptcy can permit you to:
- Discharge or eliminate most, if not all of your debts;
- Temporarily stop a foreclosure proceeding to allow you time (possibly up to 60 months) to catch up on past due mortgage payments;
- Stop the repossession of your car;
- In some cases, reduce the amount that you owe on your vehicle loan to the value of the car. For example, you may owe your auto lender $20,000 on a car that is only worth $12,000. Bankruptcy may permit you to keep the car by paying your creditor only $12,000, plus interest, plus some percentage of the remaining $8,000 that you would owe.
- Lower the interest rate on your vehicle loan to a more manageable rate;
- Stop most court proceedings that have been brought against you;
- Stop wage garnishments and debt collection harassment;
- Restore or prevent termination of your utility services (though a deposit may be required);
- Challenge the claims of Creditors who are attempting to collect more than you actually owe.
What are the Different Types of Bankruptcy?
There are several different types of Bankruptcy that provide differing forms of relief. The two “Chapters” most typically used by individuals are: Chapter 7 and Chapter 13.
What is Chapter 7
Chapter 7 is a liquidation proceeding, sometimes referred to as “straight bankruptcy”. In a Chapter 7 case, a Debtor receives a discharge of most or all of his debts, in return for the liquidation (sale) of his “non-exempt” property, by a Trustee who is appointed by the Court to administer the case. The Trustee then distributes any proceeds from the sale of property to the Debtor’s Creditors. If you do not own anything of significant value, you will not lose any of your property.
Will I Lose All of My Property If I File Chapter 7?
No. Bankruptcy Law provides that a Debtor is allowed to keep certain property that may be claimed as exempt.
Will I Lose My House or Car If I File Chapter 7?
No. Chapter 7 can permit you to keep your house and car. As long as you are current on your car and mortgage payments, and there is no significant equity in the property, you should be able to reaffirm these obligations, and keep the property. Further, if you do have some equity in your house or car, if the amount of equity is below the Alabama Exemption limits, you will be able to keep the property. If your equity exceeds these limits, you may need to file a Chapter 13, which would permit you keep the property.
What Property Will I Be Allowed to Keep In a Chapter 7 Filed in Alabama?
In a Chapter 7 Case filed in Alabama, under the Alabama State Exemptions you may be able to keep any equity the following property:
- Your “homestead”—your house or mobile home up to a total amount of $15,000; the property cannot exceed 160 acres (husband and wife may double);
- Books, burial plots, church pews, clothing needed, family portraits or pictures (unlimited amount);
- Personal property (i.e. cash, bank accounts, vehicles, etc.) up to $7,500, except life insurance;
- Annuity proceeds or avails to $250 per month;
- Disability proceeds or avails to $250 per month;
- Some types of insurance benefits, pensions, workers compensation, unemployment compensation, and various other public benefits;
- Social Security, Veterans Benefits, and other various retirement benefits;
- Property of a business partnership;
- Various other types of property.
Can I Discharge Student Loans or Taxes in a Chapter 7 Case?
Student loans cannot be discharged in Chapter 7, and will survive after the conclusion of the case. Income taxes for recent tax years typically cannot be discharged, but depending upon whether timely returns have been filed, some older obligations to the IRS can be discharged.
What is Chapter 13?
Chapter 13 is debt re-adjustment proceeding for individuals whereby a Debtor is able to keep most of his property (i.e. house, cars, furniture or other necessary personal property) under a Court approved repayment plan, while discharging most, if not all, of his other debts. In a Chapter 13 case, a Debtor proposes a plan to repay his creditors, and consolidates most of his debts into a single monthly payment that the Debtor can more easily afford. Chapter 13 provides a broader discharge than a Chapter 7 case, and certain debts which are non-dischargable in a Chapter 7 case may be discharged in a Chapter 13.
What Chapter is Right for Me?
An experienced attorney at Over the Mountain Law Center will recommend which bankruptcy chapter is best for you, based upon all of the facts and circumstances of your case. Call us today at (205) 870-8480 for a free consultation.
How Much Does Bankruptcy Cost?
No two cases are exactly the same, but bankruptcy is probably more affordable than you think. We base our legal fees on the facts and circumstances of each specific case. After the initial free consultation, we will quote you a specific fee which can be paid in installments. Note that all attorneys’ fees and court filing fees for a Chapter 7 case must be paid in full in order to file your case. The filing fees for a Chapter 7 case are $335.00.
A Chapter 13 case can be filed upon payment of the court filing fee and a portion of the attorney’s fees. The balance of the Chapter 13 legal fees can be paid from the monthly plan payment that you make for your Chapter 13 payment plan. The filing fees for a Chapter 13 are $310.00.
Credit Counseling Requirement:
There are two courses that you (and your spouse, if filing jointly) are required to take in connection with your bankruptcy case. The first course, Pre-Bankruptcy Credit Counseling should be taken immediately. We cannot file your case until you have completed this course and received a credit counseling certificate. You must provide us with a copy of your credit counseling certificate.
The second course is called a Personal Financial Management Course. It must be completed within sixty (60) days after the first date set for your Section 341 Meeting with the Trustee. After completion of your Personal Financial Management Course, you will receive a certificate of completion of the course, which also must be provided to our office.
Our office has referred clients to Biblical Financial Concepts d/b/a Stand Sure Information Services to fulfill both of these requirements. After scheduling your free consultation with our office, Please call them at (205) 421-1590 or visit their website atwww.biblicalfinancialconcepts.org. Please note that there is a fee for both courses.
How Do I Get the Process of Filing Bankruptcy Started?
The first step is to contact our office at (205) 870-8480 and schedule an appointment. If possible, please bring the following documents to your initial appointment:
- Copies of all bills, loan documents, collection letters that you have received;
- Any court documents pertaining to lawsuits or foreclosure proceedings brought against you;
- Proof of your income (i.e. paystubs) received from your employer for the past 6 months;
- Copies of your tax returns filed for the past 4 years.