CHAPTER 7 BANKRUPTCY

gET A FRESH START

In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts.  The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts and thereby give you a fresh start.  Chapter 7 Bankruptcy is very good at getting rid of unsecured debts (debts without collateral) such as credit cards, medical bills, and signature loans; and secured debts for which you want to surrender the collateral, such as mortgages and car loans where you want to and choose to get out from under the debt by surrendering the house or car.  A Chapter 7 is a relatively quick process which allows you to rebuild and come back from it quickly as well.  Once you file your case, you are normally done and out of bankruptcy in 3 months.  Most of our clients say that it feels like the weight of the world is off of their shoulders once we file their case.

AND KEEP YOUR HOUSE, VEHICLES, AND OTHER STUFF

In most cases (it is almost always your choice) you can keep the real property (houses and land) and personal property (cars, furniture, bank accounts, etc.) that you want to keep.  You must be able to show that once your other debt is gone that you can afford to make any payments for liens on these things.  There must also be little to know unexempt equity in those things.  Equity is the difference in what something is worth versus what is owed on it.  Example: Your house is worth $150,000 and you owe a mortgage on it with a pay off of $125,000.  Your equity is $25,000.  In Alabama, you are allowed an exemption $15,500 for an individual or $31,000 for a married couple of equity in real property and $7,750 of equity for an individual or $15,500 for a married couple of equity in personal property.  If you have significant equity over your exemptions, there is a risk that the Trustee's office will pursue turnover of the property.  This is extremely rare because most people owe as much or more on their property than it is worth and the exemptions normally cover any equity debtors may have.  If you do have significant equity then there are a couple of options that your bankruptcy attorney may discuss with you, including filing a Chapter 13 Bankruptcy instead.

In a Chapter 7, to keep your any real or personal property with mortgages or loans against them, you normally must be current or close to current on your payments on these loans and have insurance as set out in your loan paperwork with the lender.  If you want to keep property like a home or a car and are behind on the mortgage or car loan payments and cannot catch those back payments up quickly, a chapter 7 case probably will not be the right choice for you.  That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.

Call 256-739-1962 or click here to speak with or schedule an appointment for a free consultation with a Chapter 7 Bankruptcy attorney at Collins Law Offices, PC.  We know filing a Chapter 7 Bankruptcy is not an easy decision.  We want you to have all the information you need to make that decision before you pay us anything.