CHAPTER 7 BANKRUPTCY IN ALABAMA
gET A FRESH START
AND KEEP YOUR HOUSE, VEHICLES, AND OTHER STUFF
Chapter 7 bankruptcy is a process in which the debtor gets to keep his or her property and discharge their debt. Chapter 7 bankruptcy proceedings can be used for both individual consumers, as well as corporations and partnerships.
The Chapter 7 bankruptcy basics are that you file a petition asking the court to discharge your debt. The basic idea in filing for bankruptcy under Chapter 7 is to wipe out (discharge) your debt and thereby give you a fresh start to your financial situation. Chapter 7 Bankruptcy is very good at getting rid of unsecured debts (debt 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. Once you surrender the property you want to surrender, the debts become unsecured debts and the debts are discharged. A Chapter 7 bankruptcy is a relatively quick process which allows you to rebuild your credit score and come back from it quickly as well. After filing bankruptcy, you are normally done and out of bankruptcy in 3 months and can start working on improving your credit scores. Most of our clients say that it feels like the weight of the world is off of their shoulders once we file their case.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
Chapter 7 Attorney Disclaimer
The following is general information regarding a typical case. Your case could have different issues and concerns, so please seek the advice of a qualified Chapter 7 Bankruptcy Attorney before making any decisions or attempting to file on your own. Bankruptcy is complex. Our bankruptcy attorneys at our Cullman, Alabama office study the bankruptcy code and rules which are thousands of pages, the bankruptcy forms which for a typical case run from 50 to 70 pages, our office has access to thousands of books, treatises, websites for bankruptcy attorneys, listserves, case law, etc. in order to stay abreast of the latest rulings and trends regarding bankruptcy, including Chapter 7 Bankruptcy and Chapter 13.
Hopefully this page, along with our page regarding Ch 13 will assist you in deciding which will be the best - filing Chapter 7 or Chapter 13. Below are more details regarding Chapter 7.
Chapter 7 Bankruptcy in General
When most hear the word bankruptcy, they think Chapter 7 bankruptcy. There are different names for this type of bankruptcy -- fresh start bankruptcy, straight bankruptcy, or liquidation. This is the most popular type of bankruptcy process for individuals.
In most cases (it is almost always your choice) you can exempt property and can keep the real property (houses and land) and personal property (cars, furniture, bank accounts, etc.) that you want to keep when you file a fresh start bankruptcy. You must be able to show that once your other debt is gone that you can afford to make any payments for liens/secured debts on these things. There must also be little to know unexempt equity in those things.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
Alabama Exemptions
In Alabama, you are allowed an exemption $16,450 for an individual or $32,900 for a married couple of equity in real property and $8,225 of equity for an individual or $16,450 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 the bankruptcy trustee could attempt to take possession of the property and recover the equity. In that situation, there are a couple of options that your bankruptcy attorney may discuss with you, including filing a Ch 13 bankruptcy instead.
In a Chapter 7 bankruptcy, 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 the secured debts 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 Ch 7 bankruptcy case probably will not be the right choice for you. That is because when you file Chapter 7 bankruptcy it does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
Rules and Requirements to file Chapter 7 bankruptcy in Alabama
Who is Eligible to File for Chapter 7 Bankruptcy in Alabama
Start the bankruptcy process if you live, have a residence or business in the U.S., or are otherwise connected to the American economy. To be eligible for relief, you must, with certain exceptions to the rule, have received pre-filing counseling within 180 days before filing. You do not have to be behind on payments or have a certain amount of debt, or have more assets than debt.
Prior Bankruptcy Cases Effect on Eligibility to File Chapter 7 Bankruptcy
There are some limitation if you have had previous filings within a certain number of years. If you previously received a discharge on a Ch 7, you would need to wait 8 years before filing a new Ch 7.
If you previously filed a Ch 13 and received a discharge, you would normally need to wait 6 years to file a new Ch 7. This may be reduced if you paid back certain amounts of your debt through your repayment plan.
If your prior case was dismissed or closed without discharge within a year of your intended new filing, you can normally refile, but a motion to extend the automatic stay may need to be filed immediately after filing your petition to continue the protection of your assets and income.
There can be other issues for individuals regarding refiling if, within the preceding 180 days, (1) they were the debtor in a bankruptcy case dismissed for willful failure to abide by orders of the court or (2) they requested and obtained voluntary dismissal of a bankruptcy case following the filing of a request for relief from the automatic stay.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
Eligibility to File a Chapter 7 Bankruptcy Does Not Assure Discharge of Debt
To obtain a Chapter 7 bankruptcy discharge, there are certain requirements. Obtaining a discharge is the goal of filing a fresh start bankruptcy. The discharge order is what gets rid of your debt. Therefore, it is important that you meet the requirements for discharge.
List All Debts and Creditors
One requirement is that the debt must be listed and the creditor notified of your bankruptcy. To help with this, our Cullman, Alabama attorneys obtain your credit report and list the debt on your credit report. Most credit card debts and bank loan debts appear on credit reports; however, some debts to not appear on credit reports, so you should collect your bills, credit card and loan statements, letters, emails, loan papers, etc. and provide them to your Ch 7 attorneys so they can be sure to list all holders of credit on your bankruptcy forms. This will ensure that all harassing calls, letters, lawsuits, and garnishments stop and that you get a discharge which will stop them forever.
Fraud Issues
There can also be issues if you recently before filing borrowed significant sums of money, made large charges on credit cards, or were not truthful when applying for credit. The provisions which most commonly present problems are those that deny a discharge when the debtor has committed certain acts with an intent to hinder, delay, or defraud a creditor. If you have these issues, a Chapter 13 bankruptcy may be the better route because you can handle these debts through a repayment plan.
Certain Debts are Not Dischargeable
Their are certain debts which are either non-dischargeable or are rarely dischargeable. This includes most tax debts, domestic support obligations (usually child support and/or alimony), most fines and penalties owed to governmental units (usually criminal case fines, restitution, fees), most student loans. Depending on the age, type, and whether returns were filed, sometimes taxes can be discharged. In addition, if the debtor is very low income (at or near the poverty line) and there are legitimate reasons the debtor's income is not likely to increase, student loans may be dischargeable.
Credit Counseling Certificate Requirement
Anyone who has not received within 180 days of filing a pre-filing counseling from an approved counseling agency will be ineligible to file a petition. In addition, the debtor must file the certificate and a debtor’s statement of compliance with the pre-filing counseling requirement at the time filing for bankruptcy.
At our Cullman, Alabama office our Ch 7 attorneys will assist you in obtaining the credit counseling certificate in the most efficient way possible. Our attorneys work with certain agencies and have relationships and accounts with them in order to make it as easy as possible for our clients. We will handle all of this for you through our office.
To get your pre-filing certificate, you will have to give a budget. This budget shows the income and expenses of the debtor as well as all debts. Agencies almost always confirm that the debtor is at a point where bankruptcy is probably their best option for financial solutions.
Sometimes their is a need to file for Chapter 7 bankruptcy immediately. You still must have the certificate. Due to our relationships with the pre-filing certificate agencies we us, we are able to obtain the certificate almost immediately and file for Chapter 7 on the same date the certificate is obtained.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
The Means Test
You must qualify under the Means Test to receive a discharge under Ch 7. To do so, first you see if you are over or under the median income for a family of your size in Alabama. For a quick check click here. If your household income is under the median income for the same size household in Alabama, then you have passed the “Means Test” and qualify to file a Ch 7.
If you are over the average income, it DOES NOT mean you cannot seek filing a Ch 7. Most people can still file. However, an extra form will need to be completed. In this form you are allowed to deduct taxes, housing costs, transportation costs, secured debt payments, medical costs, and many other costs from your gross income. After completing this form, it normally shows that debtors have little to no income to pay unsecured creditors; and therefore, qualify to file a Ch 7.
Do not let the “Means Test” intimidate you from seeking advice from a qualified bankruptcy attorney. The great majority of people can "pass" the Means Test one of the two ways and file a Ch 7 . Despite what you may have heard, there is a high chance that you can get help with Chapter 7. If for some reason you cannot, a Chapter 13 bankruptcy (or a Chapter 11 if you are a business) can still protect you from creditors.
The Petition, Schedules, and Other Forms
Filing a fresh start case can seem daunting at first, but this process is easier than you may think, especially with a qualified attorney. A voluntary petition filing starts by completing and filing a simple eight-page petition which includes statements about debtor's pre-bankruptcy counseling along with their Social Security number and a list of creditors. You will actually be protected with just these documents filed; however, unless it is an emergency, we prefer to file these documents plus the remaining schedules and forms with the initial petition filing. If you only file the basic petition, you will have 14 days to file the remaining documents.
The court filing fee for filing the petition is a total of $338 which is paid at the time of filing. The fee for a married couple filing together as a joint case is the same as for an individual filing alone.
The other forms as mentioned above must be filed either concurrently with the petition or within 14 days thereafter. The remaining forms include the debtor’s statement of financial affairs and schedules (lists of assets, debts, income, expenses, contracts, and co-debtors), a statement of current monthly income and means test calculation, a disclosure of attorney fees, copies of “payment advices” from employers, a certificate from a credit counseling agency evidencing completion of a prepetition credit counseling briefing, and a statement of intention with respect to property securing consumer debts.
Where to File your Chapter 7 Bankruptcy Case
A debtor may file a bankruptcy in Alabama if the debtor has lived here for more than 180 days. In addition, the debtor must in the correct federal court district and division within that district. Here is a link to a map of the counties in the Northern Division of Alabama and it also shows the division for each county. Collins Law Offices, P.C., cullmanbankruptcyattorney.com, represents clients for the entire Northern District of Alabama.
If we can show a good reason (such as your employment and/or all your personal business is in a division different from your residence), sometimes we can file your case in a division different from the division of your residence.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
What Happens When You File a Chapter 7 Bankruptcy
Upon filing your Ch 7 petition, you are immediately protected from creditors. The bankruptcy court has now automatically set in motion the process of granting the relief requested.
A trustee is appointed soon after filing. The trustee's job is to make sure assets go to the correct individual or entity. This is almost always back to the debtor. So, in most cases, this trustee will review the paperwork filed and conduct the meeting of creditors and if things are in order you will hear very little else from them.
The filing of the petition operates to start the automatic stay. The stay prevents further collection attempts, proceedings or acts against the debtor or the debtor’s property by anyone, without first seeking an obtaining approval from the bankruptcy court which is rare. The stay is an order that freezes the bankrupt’s property so it can be examined and administered while in bankruptcy.
The court will send notices to all creditors, the debtor, and the debtor’s attorney, that the case was filed. This notice will include notice that the automatic stay is in effect and the date, time, and place of the section 341 meeting, also known as the meeting of creditors. This meeting is normally scheduled about a month after the filing of the petition.
Deadlines for creditors who wish to file claims, objections to exemptions, or complaints raising objections to discharge or to the dischargeability of a particular debt are also set out in the notice.
Reaffirmation Agreements Under Bankruptcy - Chapter 7
If you have secured debts, which is a debt that is secured by collateral, usually a house (mortgage), auto loan, or other loan secured by creditor, you may be request by the holder of the secured credit to sign a reaffirmation agreement. This is an agreement in which the debtor agrees to repay a debt despite having filed a Chapter 7 Bankruptcy.
The options with regards to secured debts in a Chapter 7 Bankruptcy are normally -- (a) surrender the collateral and completely wipeout (discharge) the debt, or (b) keep the collateral and continue paying on that debt normally under the same terms as in the original contract. Reaffirmation agreements are requested and/or required by most secured creditors in order for the debtor to keep the collateral and continue paying that debt.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
Meeting of Creditors
The first, and often only, time a debtor has any type of "court proceeding" is at the section 341(a) hearing. This is not really court as it is not in front of a judge and is not in the courtroom. This meeting is set approximately 30 days from the bankruptcy filing. At this meeting the bankruptcy trustee normally asks 5 - 7 questions. These questions mostly confirm information already contained in the filed bankruptcy forms.
Even though it is called a meeting of creditors and creditors can attend and ask a few questions as well, in practice, it is rare that creditors appear as in reality it is normally a waste of time and money for unsecured creditors such as credit card companies to attend. If a creditor does appear it is often a secured creditor, a mortgage holder or car lienholder. They will confirm your plan for the collateral. If your plan is to keep it, they will make sure you have insurance and that the collateral is in your possession and is in good condition. If you are surrendering the collateral, they will often times make arrangements for its return or pick-up.
The trustee and/or the bankruptcy laws require several documents prior to the meeting. These include: copies of the debtor’s federal income tax return at least seven days prior to the meeting, or a transcript thereof, for the tax year ending immediately before the petition date and for which such a return was filed, or provide an affidavit of why a return was not filed; a driver's license or other ID, Social Security Card, pay stubs or other proof of income or an affidavit of why a there is no proof of income, bank statements for all bank or financial institution accounts or an affidavit stating that you do not have such an account.
The meeting is usually very simple. A person may have to wait 15 -30 minutes until their name is called, but once called that person's particular meeting normally lasts less than 5 minutes.
Trustee's Handling of Assets
After the meeting of creditors the trustee, if it is the case, which it normally is, will file a document with the bankruptcy court stating that after examination there appears to be no unexempt assets from which to pay dividends to unsecured creditors and that the trustee abandons any interest in the assets, the exempt property, back to the debtor.
Every now and then there are assets that can be sold and distributed - nonexempt property. This should never be a surprise if you have a qualified bankruptcy attorney as the possibility of nonexempt property should be discussed with you prior to the filing of the case. Often times it could be real estate that you cannot afford fix up to sale or a possible lawsuit that does not settle or resolve to your benefit until after your bankruptcy filing. The trustee will take possession of the unexempt assets, convert to cash, pay off any allowed liens, notify creditors to file claims, and distribute the funds to allowed claims pro rata.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
The Discharge
The conclusion of a liquidation bankruptcy - a Chapter 7 - is normally the granting of a discharge. To become eligible for a bankruptcy - Chapter 7 - discharge, a debtor must complete a personal financial management instructional course. Similar to our handling of the Credit Counseling Certificate, our attorneys at our Cullman Bankruptcy Attorney office will help you with this and make it as easy as possible. Obtaining the Personal Financial Management Certificate usually involves watching a video. The certificate must be filed within sixty days after the first date set for the meeting of creditors.
All debts become discharged except: most taxes, certain debts not listed in the schedules, domestic support obligations (child support and/or alimony), most fines and penalties owed to governmental units, most student loans, debts which were or could have been listed in a prior bankruptcy in which discharge was denied or waived, certain debts incurred by driving while intoxicated, certain debts of individuals involved in the banking or savings and loan industry, and debts which have been ruled nondischargeable during the case.
Other exceptions to the discharge include federal criminal restitution debts, debts incurred to pay nondischargeable taxes, marital property settlement debts, certain condominium, home owner association and cooperative fees, certain court fees and costs owed by prisoners, and debts for repayment of loans from pension plans. Also, if a secured creditor’s lien has not been disallowed, avoided, or satisfied, that creditor's lien against the collateral remains.
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. located in Cullman, AL. 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 hire an attorney or pay us anything.
The Chapter 7 bankruptcy basics are that you file a petition asking the court to discharge your debt. The basic idea in filing for bankruptcy under Chapter 7 is to wipe out (discharge) your debt and thereby give you a fresh start to your financial situation. Chapter 7 Bankruptcy is very good at getting rid of unsecured debts (debt 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. Once you surrender the property you want to surrender, the debts become unsecured debts and the debts are discharged. A Chapter 7 bankruptcy is a relatively quick process which allows you to rebuild your credit score and come back from it quickly as well. After filing bankruptcy, you are normally done and out of bankruptcy in 3 months and can start working on improving your credit scores. Most of our clients say that it feels like the weight of the world is off of their shoulders once we file their case.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
Chapter 7 Attorney Disclaimer
The following is general information regarding a typical case. Your case could have different issues and concerns, so please seek the advice of a qualified Chapter 7 Bankruptcy Attorney before making any decisions or attempting to file on your own. Bankruptcy is complex. Our bankruptcy attorneys at our Cullman, Alabama office study the bankruptcy code and rules which are thousands of pages, the bankruptcy forms which for a typical case run from 50 to 70 pages, our office has access to thousands of books, treatises, websites for bankruptcy attorneys, listserves, case law, etc. in order to stay abreast of the latest rulings and trends regarding bankruptcy, including Chapter 7 Bankruptcy and Chapter 13.
Hopefully this page, along with our page regarding Ch 13 will assist you in deciding which will be the best - filing Chapter 7 or Chapter 13. Below are more details regarding Chapter 7.
Chapter 7 Bankruptcy in General
When most hear the word bankruptcy, they think Chapter 7 bankruptcy. There are different names for this type of bankruptcy -- fresh start bankruptcy, straight bankruptcy, or liquidation. This is the most popular type of bankruptcy process for individuals.
In most cases (it is almost always your choice) you can exempt property and can keep the real property (houses and land) and personal property (cars, furniture, bank accounts, etc.) that you want to keep when you file a fresh start bankruptcy. You must be able to show that once your other debt is gone that you can afford to make any payments for liens/secured debts on these things. There must also be little to know unexempt equity in those things.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
Alabama Exemptions
In Alabama, you are allowed an exemption $16,450 for an individual or $32,900 for a married couple of equity in real property and $8,225 of equity for an individual or $16,450 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 the bankruptcy trustee could attempt to take possession of the property and recover the equity. In that situation, there are a couple of options that your bankruptcy attorney may discuss with you, including filing a Ch 13 bankruptcy instead.
In a Chapter 7 bankruptcy, 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 the secured debts 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 Ch 7 bankruptcy case probably will not be the right choice for you. That is because when you file Chapter 7 bankruptcy it does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
Rules and Requirements to file Chapter 7 bankruptcy in Alabama
Who is Eligible to File for Chapter 7 Bankruptcy in Alabama
Start the bankruptcy process if you live, have a residence or business in the U.S., or are otherwise connected to the American economy. To be eligible for relief, you must, with certain exceptions to the rule, have received pre-filing counseling within 180 days before filing. You do not have to be behind on payments or have a certain amount of debt, or have more assets than debt.
Prior Bankruptcy Cases Effect on Eligibility to File Chapter 7 Bankruptcy
There are some limitation if you have had previous filings within a certain number of years. If you previously received a discharge on a Ch 7, you would need to wait 8 years before filing a new Ch 7.
If you previously filed a Ch 13 and received a discharge, you would normally need to wait 6 years to file a new Ch 7. This may be reduced if you paid back certain amounts of your debt through your repayment plan.
If your prior case was dismissed or closed without discharge within a year of your intended new filing, you can normally refile, but a motion to extend the automatic stay may need to be filed immediately after filing your petition to continue the protection of your assets and income.
There can be other issues for individuals regarding refiling if, within the preceding 180 days, (1) they were the debtor in a bankruptcy case dismissed for willful failure to abide by orders of the court or (2) they requested and obtained voluntary dismissal of a bankruptcy case following the filing of a request for relief from the automatic stay.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
Eligibility to File a Chapter 7 Bankruptcy Does Not Assure Discharge of Debt
To obtain a Chapter 7 bankruptcy discharge, there are certain requirements. Obtaining a discharge is the goal of filing a fresh start bankruptcy. The discharge order is what gets rid of your debt. Therefore, it is important that you meet the requirements for discharge.
List All Debts and Creditors
One requirement is that the debt must be listed and the creditor notified of your bankruptcy. To help with this, our Cullman, Alabama attorneys obtain your credit report and list the debt on your credit report. Most credit card debts and bank loan debts appear on credit reports; however, some debts to not appear on credit reports, so you should collect your bills, credit card and loan statements, letters, emails, loan papers, etc. and provide them to your Ch 7 attorneys so they can be sure to list all holders of credit on your bankruptcy forms. This will ensure that all harassing calls, letters, lawsuits, and garnishments stop and that you get a discharge which will stop them forever.
Fraud Issues
There can also be issues if you recently before filing borrowed significant sums of money, made large charges on credit cards, or were not truthful when applying for credit. The provisions which most commonly present problems are those that deny a discharge when the debtor has committed certain acts with an intent to hinder, delay, or defraud a creditor. If you have these issues, a Chapter 13 bankruptcy may be the better route because you can handle these debts through a repayment plan.
Certain Debts are Not Dischargeable
Their are certain debts which are either non-dischargeable or are rarely dischargeable. This includes most tax debts, domestic support obligations (usually child support and/or alimony), most fines and penalties owed to governmental units (usually criminal case fines, restitution, fees), most student loans. Depending on the age, type, and whether returns were filed, sometimes taxes can be discharged. In addition, if the debtor is very low income (at or near the poverty line) and there are legitimate reasons the debtor's income is not likely to increase, student loans may be dischargeable.
Credit Counseling Certificate Requirement
Anyone who has not received within 180 days of filing a pre-filing counseling from an approved counseling agency will be ineligible to file a petition. In addition, the debtor must file the certificate and a debtor’s statement of compliance with the pre-filing counseling requirement at the time filing for bankruptcy.
At our Cullman, Alabama office our Ch 7 attorneys will assist you in obtaining the credit counseling certificate in the most efficient way possible. Our attorneys work with certain agencies and have relationships and accounts with them in order to make it as easy as possible for our clients. We will handle all of this for you through our office.
To get your pre-filing certificate, you will have to give a budget. This budget shows the income and expenses of the debtor as well as all debts. Agencies almost always confirm that the debtor is at a point where bankruptcy is probably their best option for financial solutions.
Sometimes their is a need to file for Chapter 7 bankruptcy immediately. You still must have the certificate. Due to our relationships with the pre-filing certificate agencies we us, we are able to obtain the certificate almost immediately and file for Chapter 7 on the same date the certificate is obtained.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
The Means Test
You must qualify under the Means Test to receive a discharge under Ch 7. To do so, first you see if you are over or under the median income for a family of your size in Alabama. For a quick check click here. If your household income is under the median income for the same size household in Alabama, then you have passed the “Means Test” and qualify to file a Ch 7.
If you are over the average income, it DOES NOT mean you cannot seek filing a Ch 7. Most people can still file. However, an extra form will need to be completed. In this form you are allowed to deduct taxes, housing costs, transportation costs, secured debt payments, medical costs, and many other costs from your gross income. After completing this form, it normally shows that debtors have little to no income to pay unsecured creditors; and therefore, qualify to file a Ch 7.
Do not let the “Means Test” intimidate you from seeking advice from a qualified bankruptcy attorney. The great majority of people can "pass" the Means Test one of the two ways and file a Ch 7 . Despite what you may have heard, there is a high chance that you can get help with Chapter 7. If for some reason you cannot, a Chapter 13 bankruptcy (or a Chapter 11 if you are a business) can still protect you from creditors.
The Petition, Schedules, and Other Forms
Filing a fresh start case can seem daunting at first, but this process is easier than you may think, especially with a qualified attorney. A voluntary petition filing starts by completing and filing a simple eight-page petition which includes statements about debtor's pre-bankruptcy counseling along with their Social Security number and a list of creditors. You will actually be protected with just these documents filed; however, unless it is an emergency, we prefer to file these documents plus the remaining schedules and forms with the initial petition filing. If you only file the basic petition, you will have 14 days to file the remaining documents.
The court filing fee for filing the petition is a total of $338 which is paid at the time of filing. The fee for a married couple filing together as a joint case is the same as for an individual filing alone.
The other forms as mentioned above must be filed either concurrently with the petition or within 14 days thereafter. The remaining forms include the debtor’s statement of financial affairs and schedules (lists of assets, debts, income, expenses, contracts, and co-debtors), a statement of current monthly income and means test calculation, a disclosure of attorney fees, copies of “payment advices” from employers, a certificate from a credit counseling agency evidencing completion of a prepetition credit counseling briefing, and a statement of intention with respect to property securing consumer debts.
Where to File your Chapter 7 Bankruptcy Case
A debtor may file a bankruptcy in Alabama if the debtor has lived here for more than 180 days. In addition, the debtor must in the correct federal court district and division within that district. Here is a link to a map of the counties in the Northern Division of Alabama and it also shows the division for each county. Collins Law Offices, P.C., cullmanbankruptcyattorney.com, represents clients for the entire Northern District of Alabama.
If we can show a good reason (such as your employment and/or all your personal business is in a division different from your residence), sometimes we can file your case in a division different from the division of your residence.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
What Happens When You File a Chapter 7 Bankruptcy
Upon filing your Ch 7 petition, you are immediately protected from creditors. The bankruptcy court has now automatically set in motion the process of granting the relief requested.
A trustee is appointed soon after filing. The trustee's job is to make sure assets go to the correct individual or entity. This is almost always back to the debtor. So, in most cases, this trustee will review the paperwork filed and conduct the meeting of creditors and if things are in order you will hear very little else from them.
The filing of the petition operates to start the automatic stay. The stay prevents further collection attempts, proceedings or acts against the debtor or the debtor’s property by anyone, without first seeking an obtaining approval from the bankruptcy court which is rare. The stay is an order that freezes the bankrupt’s property so it can be examined and administered while in bankruptcy.
The court will send notices to all creditors, the debtor, and the debtor’s attorney, that the case was filed. This notice will include notice that the automatic stay is in effect and the date, time, and place of the section 341 meeting, also known as the meeting of creditors. This meeting is normally scheduled about a month after the filing of the petition.
Deadlines for creditors who wish to file claims, objections to exemptions, or complaints raising objections to discharge or to the dischargeability of a particular debt are also set out in the notice.
Reaffirmation Agreements Under Bankruptcy - Chapter 7
If you have secured debts, which is a debt that is secured by collateral, usually a house (mortgage), auto loan, or other loan secured by creditor, you may be request by the holder of the secured credit to sign a reaffirmation agreement. This is an agreement in which the debtor agrees to repay a debt despite having filed a Chapter 7 Bankruptcy.
The options with regards to secured debts in a Chapter 7 Bankruptcy are normally -- (a) surrender the collateral and completely wipeout (discharge) the debt, or (b) keep the collateral and continue paying on that debt normally under the same terms as in the original contract. Reaffirmation agreements are requested and/or required by most secured creditors in order for the debtor to keep the collateral and continue paying that debt.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
Meeting of Creditors
The first, and often only, time a debtor has any type of "court proceeding" is at the section 341(a) hearing. This is not really court as it is not in front of a judge and is not in the courtroom. This meeting is set approximately 30 days from the bankruptcy filing. At this meeting the bankruptcy trustee normally asks 5 - 7 questions. These questions mostly confirm information already contained in the filed bankruptcy forms.
Even though it is called a meeting of creditors and creditors can attend and ask a few questions as well, in practice, it is rare that creditors appear as in reality it is normally a waste of time and money for unsecured creditors such as credit card companies to attend. If a creditor does appear it is often a secured creditor, a mortgage holder or car lienholder. They will confirm your plan for the collateral. If your plan is to keep it, they will make sure you have insurance and that the collateral is in your possession and is in good condition. If you are surrendering the collateral, they will often times make arrangements for its return or pick-up.
The trustee and/or the bankruptcy laws require several documents prior to the meeting. These include: copies of the debtor’s federal income tax return at least seven days prior to the meeting, or a transcript thereof, for the tax year ending immediately before the petition date and for which such a return was filed, or provide an affidavit of why a return was not filed; a driver's license or other ID, Social Security Card, pay stubs or other proof of income or an affidavit of why a there is no proof of income, bank statements for all bank or financial institution accounts or an affidavit stating that you do not have such an account.
The meeting is usually very simple. A person may have to wait 15 -30 minutes until their name is called, but once called that person's particular meeting normally lasts less than 5 minutes.
Trustee's Handling of Assets
After the meeting of creditors the trustee, if it is the case, which it normally is, will file a document with the bankruptcy court stating that after examination there appears to be no unexempt assets from which to pay dividends to unsecured creditors and that the trustee abandons any interest in the assets, the exempt property, back to the debtor.
Every now and then there are assets that can be sold and distributed - nonexempt property. This should never be a surprise if you have a qualified bankruptcy attorney as the possibility of nonexempt property should be discussed with you prior to the filing of the case. Often times it could be real estate that you cannot afford fix up to sale or a possible lawsuit that does not settle or resolve to your benefit until after your bankruptcy filing. The trustee will take possession of the unexempt assets, convert to cash, pay off any allowed liens, notify creditors to file claims, and distribute the funds to allowed claims pro rata.
Click here for a Free Consultation, no obligation and no pressure. Your consultation can be in person if you are near Cullman County, Alabama or by telephone if you prefer or are located elsewhere in Alabama. Find out whether Chapter 7 bankruptcy or a Chapter 13 bankruptcy is right for your situation.
The Discharge
The conclusion of a liquidation bankruptcy - a Chapter 7 - is normally the granting of a discharge. To become eligible for a bankruptcy - Chapter 7 - discharge, a debtor must complete a personal financial management instructional course. Similar to our handling of the Credit Counseling Certificate, our attorneys at our Cullman Bankruptcy Attorney office will help you with this and make it as easy as possible. Obtaining the Personal Financial Management Certificate usually involves watching a video. The certificate must be filed within sixty days after the first date set for the meeting of creditors.
All debts become discharged except: most taxes, certain debts not listed in the schedules, domestic support obligations (child support and/or alimony), most fines and penalties owed to governmental units, most student loans, debts which were or could have been listed in a prior bankruptcy in which discharge was denied or waived, certain debts incurred by driving while intoxicated, certain debts of individuals involved in the banking or savings and loan industry, and debts which have been ruled nondischargeable during the case.
Other exceptions to the discharge include federal criminal restitution debts, debts incurred to pay nondischargeable taxes, marital property settlement debts, certain condominium, home owner association and cooperative fees, certain court fees and costs owed by prisoners, and debts for repayment of loans from pension plans. Also, if a secured creditor’s lien has not been disallowed, avoided, or satisfied, that creditor's lien against the collateral remains.
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. located in Cullman, AL. 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 hire an attorney or pay us anything.