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Chapter 7 Bankruptcy Alabama

chapter 7 bankruptcy alabama

Maybe you recently lost your job or endured an expensive, painful divorce, leaving you with thousands of dollars in debt. If that’s the case, Chapter 7 bankruptcy Alabama may be your only option to wipe out debt quickly and get on with your life.

Chapter 7 is the most commonly used bankruptcy chapter in America. It immediately eliminates all unsecured debts while allowing you to maintain your credit accounts with your secured creditors.

If you are unsure whether you qualify for Chapter 7 bankruptcy, Eric M. Wilson, LLC, of Tuscaloosa, Alabama, can help you. We are not just another name, number, and fee. We have decades of knowledge about federal bankruptcy law and we’ll take the time to listen to your concerns. Our legal services will help you achieve debt relief in an efficient, cost-effective manner. Call Eric Wilson Law today at 205-349-1280 for a free consultation.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy, also called liquidation bankruptcy, is one of 6 chapters in the bankruptcy code that help people and businesses get a fresh start by wiping out the majority of their debt. In fact, Chapter 7 is the most common type of bankruptcy filing among Americans. In 2021, there were 310,597 Chapter 7 bankruptcy cases according to data from U.S. Courts.

How Does Chapter 7 Bankruptcy Work?

A Chapter 7 bankruptcy petition works by discharging the majority of your unsecured debt (such as credit card debt, medical bills, etc.) when you sell your nonexempt property and assets. But it’s important to note that you won’t lose all of your assets during the bankruptcy process. There are state and federal exemptions in place that allow debtors to keep some of their assets.

Alabama Bankruptcy Exemptions

Exempt property is basically the property that’s protected by bankruptcy exemptions. In other words, bankruptcy exemptions allow Chapter 7 filers to keep a lot of their personal property and assets. But giving up some assets is necessary in order to pay off debt. Generally, filers will have to give up unnecessary expensive items such as vacation homes, RVs, major antique collections, cars, and more.

Personal Property

According to Alabama law (AL Code 6-10-5), debtors can keep personal property such as church pews and burial plots.

Home

Alabama has a homestead exemption (AL Code 6-10-2) that protects up to $16,450 of a 160-acre residence. This residence can be anywhere that you live: a house, a mobile home, a camper on a plot of land, you name it. It’s important to note that the Alabama State Treasurer adjusts this dollar amount every three years to reflect consumer price index changes. So this is the latest homestead exemption as of July 2020. Spouses who file bankruptcy jointly can double this exemption to protect more of their home.

Retirement Accounts and Benefits

Retirement accounts and benefits are protected by Alabama bankruptcy exemptions. This includes all retirement accounts that are qualified under the Internal Revenue Code as well as teacher and state employee retirement accounts.

Income

Bankruptcy exemptions protect 75% of your income (or 30 times the federal minimum wage, which is $7.25) according to AL Code 6-10-7.

Cars

Technically, cars aren’t protected by bankruptcy exemptions because Alabama doesn’t have a motor vehicle exemption. However, there is such a thing as a “wildcard exemption” that allows the protection of up to $8,225 of the debtor’s property of their choosing. So you could choose to keep your car during Chapter 7 bankruptcy. The only things you can’t protect with this exemption, according to AL Code 6-10-6, is your income or any other compensation.

Necessary, Day-to-Day Items

Alabama bankruptcy exemptions protect items such as clothes, dishes, family pictures, and books.

COVID-19 Recovery Rebate Exemption

Alabama bankruptcy exemptions may cover some COVID-19 government refunds such as stimulus checks, child credits, and tax credits.

What is an Automatic Stay?

The bankruptcy court will issue an automatic stay immediately after your Chapter 7 bankruptcy filing. Basically, this automatic stay will prevent:

You must be current on or be able to reaffirm secured debts, such as your mortgage or car loan, in Chapter 7. Otherwise, secured and unsecured creditors can continue to harass you for unpaid bills. As a result, you could risk foreclosure or having your car repossessed. Our law firm will explain your rights in clear, easy-to-understand terms, so you always know what to expect.

Qualifying for Chapter 7 Bankruptcy

In order to qualify for Chapter 7 bankruptcy, you must pass the Chapter 7 means test. Basically, this test determines whether you make too much money to file for bankruptcy.

Let’s say you only have 1 person in your household. If your income exceeds the Alabama state median income of $49,191 annually in 2021, then you may not be able to file Chapter 7. If you make more than the state median income, a bankruptcy trustee will determine whether you have enough disposable income to pay off your debts without filing a bankruptcy petition. In this case, you’ll likely fail the means test. But you could still file for Chapter 13 bankruptcy, if necessary.

It’s important to note that median income limits change annually. Your bankruptcy attorney can help you determine whether you’ll qualify for Chapter 7.

chapter 7 bankruptcy alabama

How Much Does it Cost to File For Chapter 7 Bankruptcy in Alabama?

In order to file Chapter 7 bankruptcy Alabama, you’ll have to pay a filing fee of $335 to the bankruptcy court. If you’re really in a bind and you can’t pay that much money upfront, you could pay it in 4 installments instead. Additionally, you’ll have to pay for an experienced bankruptcy attorney to walk you through the whole process.

Alabama bankruptcy lawyer Eric Wilson already understands your financial challenges. If you’re struggling to pay your bills, that means you’re probably going to struggle to pay an attorney. At Eric Wilson Law, our legal team wants to make your bankruptcy case as easy and affordable as possible. So we will certainly work out attorney fees that are manageable for you. Remember, we are a debt relief agency. The last thing we want is to drive you deeper into crushing debt.

Chapter 7 Bankruptcy Forms

You’ll have to submit lots of bankruptcy paperwork in order to get your case moving forward. The forms are designed to provide bankruptcy courts with the following information about your:

  • Monthly expenses and debts
  • Income
  • Exempt property
  • Nonexempt property that you’ll be selling to pay off your debts
  • Property transactions that happened at least 10 years before the filing date

Once you submit all your bankruptcy forms, you’ll have to endure a debtor education course (or a credit counseling course). These courses teach general financial management skills so you’ll never find yourself crushed by unmanageable debt ever again once you get that infamous fresh start.

Debts That Chapter 7 Bankruptcy Wipes Out

Your Chapter 7 discharge will wipe out almost all of your debts, including secured debt as long as you stay current on the payments. The only debts that Chapter 7 won’t discharge are:

  • Some tax debts
  • Child support
  • Alimony
  • Most student loans
  • Certain debts that the bankruptcy court declared as “non-dischargeable,” such as those created by malicious or fraudulent behavior.

How Long Does Chapter 7 Bankruptcy Last?

The entire Chapter 7 process moves quickly. In fact, most people’s unsecured debts are discharged within 90 days.

chapter 7 bankruptcy alabama

Call Chapter 7 Bankruptcy Lawyer Eric Wilson Today

If you’re drowning in debt and filing bankruptcy feels like your only option, you need an experienced bankruptcy attorney like Eric Wilson on your side. Eric Wilson and his team of bankruptcy lawyers have extensive knowledge of Alabama bankruptcy laws. Additionally, his legal team has more than 25 years of experience in giving clients fresh starts. To begin your attorney-client relationship, call 205-349-1280 today.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

The following language is required pursuant to Rule 7.2, Alabama Rules of Professional Conduct. No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers. This website is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.

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Eric M. Wilson, LLC

1902 8th St Tuscaloosa, AL 35401

205-349-1280

205-708-2115

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