Tuscaloosa Bankruptcy Law Blog

Last July 12, we wrote about the financial difficulties of a certain football coach for one of the University of Alabama's rivals in the Southeastern Conference ("University of Alabama foe: rival football coach faces bankruptcy?"). Since that time, the coach has actually filed for bankruptcy protection. Just recently, some updates regarding the coach's Chapter 7 bankruptcy filing have raised some interesting questions for the bankruptcy court to consider.

The Razorbacks coach actually filed for Chapter 7 bankruptcy on Sept. 6. This type of bankruptcy is what is commonly referred to as a liquidation bankruptcy. A trustee is typically appointed by the bankruptcy court, and has the responsibility to marshal all of the filer's assets, sell them to raise cash and apply the monies received to outstanding debts.

The housing market in Alabama appears to be hobbling along, still victimized by the meltdown in mortgage markets and housing values that have plagued the region since the start of the recession. In the Mobile area, the median list price for homes actually decreased in August, as compared to Aug. 2011. The difference was just under a half percent. Not only have home values apparently stagnated in the area, but the time it takes to sell a home has exposed struggling homeowners to the continued possibility of foreclosure.

Mobile area homes were reportedly taking an average of 114 days to sell in August. That is an increase of 2.7 percent from July alone. Nationally, the average waiting period to sell was 91 days in August, which underscores the additional difficulties currently facing Alabama property owners. Nevertheless, the number of homes on the market for sale in the area has actually decreased almost 20 percent since the same time last year.

Some Alabama residents considering bankruptcy liquidation are concerned about their credit. Specifically, they are concerned about whether they will even be able to obtain credit after a Chapter 7 discharge. Like many things in life, those that plan ahead and are proactive in working to repair their credit may have the best success.

The difficult economic times our country has experienced over the last several years has resulted in a significant number of people seeking the protection of the bankruptcy court. Many have found Chapter 7 bankruptcy liquidation a viable means of conquering their debt problems. Rather than feeling stigmatized by having to ask for help, most individuals in Alabama and across the country find a sense of relief and the opportunity for a fresh start.

Alabama readers may take interest in a recent Chapter 13 bankruptcy proceeding in another state. A Chapter 13 bankruptcy is typically used by individual filers who want to propose a plan to settle their outstanding debt obligations over a stipulated period of time, usually between 2 and 5 years. Once a plan is submitted, the filer must meet with creditors, and the plan must be approved by the bankruptcy court.

One common approach in states where foreclosures can occur without the necessity of judicial proceedings is for the debtor or trustee in the bankruptcy proceeding to demand that a mortgage holder submit the original mortgage note as proof of its claim. Because of the way in which mortgages have been packaged and sold, it is often difficult for a lender to comply with this demand. That led the Bank of America to actually sue the bankruptcy trustee in one proceeding, arguing that the trustee was exceeding his authority in making such a demand for the original paperwork.