Bankruptcy in Tuscaloosa, AL

To most Tuscaloosa residents, bankruptcy means that their 4 hour game of Monopoly is over and they shove all their assets back to the banker. But for those who may need a way out of real financial distress, bankruptcy may be the answer to erasing some or all of your debt. If you think this may be the best course for you, you may want to consider contacting an experienced attorney in Tuscaloosa.

Types of Bankruptcy in Tuscaloosa, Alabama

Bankruptcy is a legal process that helps individuals and businesses get a fresh financial start. It eliminates a portion of or all of their debts or financial liabilities. In Tuscaloosa, AL to be approved, individuals must prove they have a hardship that prevents them from staying current on their financial obligations. Keep in mind that not all debts qualify. Some liabilities, such as child support arrears, delinquent taxes, alimony, and student loans generally do not qualify for discharge. Consumers who find themselves falling behind in debt can file either Chapter 7, 11 or 13. To determine which option is right for you, you’ll need to assess your goals, assets, and income. You should also consider working with an experienced bankruptcy attorney.

The majority of bankruptcy cases come before a judge presiding over a U.S. District Court. In Tuscaloosa, your bankruptcy case will most likely be heard by the Northern District Court of Alabama.

Chapter 7 Bankruptcy

Many people find Chapter 7 to be the right solution for their circumstances because it provides them with the opportunity to start over financially. However, before filing for Chapter 7 bankruptcy, you should thoroughly assess your income and ability to repay what you owe. You should also speak with a bankruptcy attorney in Tuscaloosa  who can help you to decide if a liquidation plan is right for you.

Typically, individuals approved for Chapter 7 lack stable income or have experienced a change in circumstances that has resulted in an inability to manage their debts. Though Chapter 7 erases debts, the tradeoff is you may have to give up certain possessions, such as your home, car or some other assets. However, once you file your petition, an automatic stay goes into effect that requires all collection activity against you like foreclosures and garnishments, to stop temporarily. However, the automatic stay does not prevent all collection attempts. For example, if you owe child support or restitution for a criminal case, you are still liable for those payments.

A Means Test is required before you are able to file for chapter 7 in Tuscaloosa. This will establish that your income does not exceed the median for the state and push you into a different filing bracket. In addition, you will also have to complete credit counseling as part of your bankruptcy process. The U.S. Department of Justice posts an approved list of entities that allow you to complete your counseling.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is more complex than other types of bankruptcy. It is often used by businesses and certain types of people. It allows petitioners to restructure their debts with a reorganization plan, so they are easier to manage over a determined length of time, usually four to 18 months. The main benefit of Chapter 11 bankruptcy is that it does not require petitioners to sell off or liquidate their assets to pay what they owe. It does allow debtors to negotiate with their creditors a reorganization plan that enables them to stay current on their debts moving forward.

The Northern District Court of Alabama states that certain requirements must be met when you submit your debt reorganization plan to the court. In addition, your creditors are allowed to have a say in the terms of the restructuring of your debt. Your plan must also include certain documents, such as:

  • Current monthly income
  • List of creditors holding largest unsecured claims
  • List of assets and liabilities
  • Statement of credit counseling

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is a debt restructuring or wage earners plan. In Tuscaloosa, AL after you file, the courts will assign a trustee to examine your liabilities and assets and ability to pay bills. Unlike other types of bankruptcy, Chapter 13 involves you restructuring your debt with a three to five-year repayment plan. The flexibility of this repayment plan will depend on what property you want to keep and how steady your income is. It may also give you the opportunity to have some or most of your debts discharged.

According to Alabama Bankruptcy Law, chapter 13 is designed for debtors to pay back their debt over a new timeline, rather than wiping the debt away through liquidation. When you file for chapter 13 you will have to formulate a payment schedule, and prove that this schedule will allow you to pay off your debts in the time limit set forth. In addition, the amount creditors receive must be the same amount as if you filed Chapter 7.

The Bankruptcy Process in Tuscaloosa, Alabama

There is never an ideal time to declare bankruptcy. However, if you are unable to pay off what you owe within five years, filing for bankruptcy can help you to lessen the negative impact on your situation and help you get back on track.

In Tuscaloosa to begin the filing process, gather all of your financial records, including monthly expenses, debts, assets and annual income. This information is crucial to give the courts an accurate picture of your circumstances. Failure to provide all necessary information can result in your petition being denied.

Residents of Tuscaloosa that pursue bankruptcy protections should know that bankruptcy does not eliminate all debt. Debts accruing from alimony or child support still must be paid. In addition, there are certain exemptions that are provided to you during this process. The Alabama State Bar declares that your homestead, pension, and retirement are all exempted from creditors. In addition, there is a wild card exemption of up to $8,225.

At least six months before you file for bankruptcy, eliminate unnecessary spending. Do not run up the balances on your credit accounts. You’ll also need to complete an approved credit counseling course, usually online or over the phone. Credit counseling is necessary to help you learn financial literacy and help you learn better financial habits. Once you complete the course, you’ll receive a certificate of completion to include in your filing. If you don’t have the certificate of completion from the credit counseling course that you took, the courts will reject your bankruptcy petition.

Work With an Experienced Tuscaloosa, Alabama Lawyer

Hiring a local bankruptcy lawyer in Tuscaloosa during this process can help reduce the costly risks of self-representation in court. An experienced bankruptcy lawyer understands state and federal bankruptcy laws. He or she can help you understand which laws apply to your case, especially which debts that can be discharged or can’t be discharged. An experienced Alabama attorney can also offer you guidance to improve the outcome of your case.

Keep in mind that there are debt management alternatives and financial resources that may benefit you more than bankruptcy, such as debt consolidation. Though bankruptcy is an attractive solution, it is best as a last resort. Do you need immediate help? Then one of our experienced lawyers in Tuscaloosa can guide you through the entire bankruptcy process. We can even help you connect with an attorney across Alabama state lines.

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