Chapter 7 Bankruptcy Attorney in Huntsville, Alabama
Helping individuals and families in North Alabama understand their options for getting relief from overwhelming debt.
Financial problems can happen for many reasons. Medical expenses, job loss, divorce, unexpected emergencies, high-interest credit cards, personal loans, and other financial pressures can make it difficult to keep up—even when you are doing everything you can.
For individuals who qualify, Chapter 7 bankruptcy can provide an opportunity to eliminate many types of debt and obtain a financial fresh start.
At Doty Law Firm, we help individuals and families understand whether Chapter 7 bankruptcy is an appropriate option, what property may be protected, which debts may be discharged, and what to expect throughout the bankruptcy process.
What Is Chapter 7 Bankruptcy?
Chapter 7 is a form of bankruptcy designed to provide qualifying individuals with relief from certain debts.
When a Chapter 7 bankruptcy case is successfully completed, many types of unsecured debt may be discharged, meaning the debtor is no longer personally responsible for paying those debts.
Common examples may include:
- credit card debt;
- medical bills;
- personal loans;
- certain old utility bills;
- some collection accounts;
- deficiency balances; and
- other qualifying unsecured debts.
Not every debt can be discharged in bankruptcy, and every person's financial situation is different. Determining which debts may be eliminated is an important part of evaluating whether Chapter 7 is right for you.
Do I Qualify for Chapter 7 Bankruptcy in Alabama?
Chapter 7 eligibility depends on several factors, including your income, household size, expenses, assets, debts, and financial circumstances.
Many individuals must complete what is commonly known as the bankruptcy means test, which is used to determine eligibility for Chapter 7 based in part on income and allowable expenses.
Being employed does not automatically prevent you from filing Chapter 7 bankruptcy. Likewise, owning a home, vehicle, or other property does not necessarily mean that Chapter 7 is unavailable.
Before filing, it is important to evaluate both eligibility and the effect bankruptcy could have on your property.
Will I Lose Everything If I File Chapter 7?
This is one of the most common concerns people have about Chapter 7 bankruptcy.
Filing Chapter 7 does not automatically mean that you lose everything you own.
Bankruptcy law provides exemptions that may protect certain property from being used to pay creditors. The exemptions available and the amount of property that can be protected depend upon the circumstances of the individual case and applicable law.
Before filing a Chapter 7 case, we review your assets and available exemptions so that you can better understand how bankruptcy may affect your property.
Can I Keep My House If I File Chapter 7?
Possibly. Filing Chapter 7 bankruptcy does not automatically mean losing your home.
Whether a home can be retained depends on factors such as the amount of equity in the property, applicable exemptions, the mortgage balance, whether payments are current, and other circumstances.
If you own a home and are considering bankruptcy, the effect of filing should be carefully evaluated before the bankruptcy petition is filed.
Can I Keep My Car?
Many Chapter 7 filers are able to retain a vehicle, but the answer depends upon the particular circumstances.
Important considerations can include the vehicle's value, the amount owed against it, available exemptions, the status of the loan, and whether the debtor wishes to continue keeping the vehicle.
Vehicle loans also present issues that should be discussed before filing so that you understand the options available to you.
What Happens to Credit Card and Medical Debt?
Credit card balances and medical bills are among the types of unsecured debts that are commonly dischargeable in Chapter 7 bankruptcy.
For someone carrying substantial unsecured debt with no realistic ability to repay it, eliminating qualifying debt can make a significant difference in his or her financial situation.
However, the dischargeability of a particular debt depends upon the nature of the debt and the circumstances surrounding it.
What Debts Cannot Be Eliminated in Chapter 7?
Chapter 7 does not eliminate every type of debt.
Certain obligations may be excluded from discharge or subject to special bankruptcy rules. Examples can include certain taxes, domestic-support obligations such as child support and alimony, many student loans, and certain debts arising from particular types of conduct.
The fact that you have some nondischargeable debt does not necessarily mean Chapter 7 would provide no benefit. The important question is how bankruptcy would affect your overall financial situation.
Can Chapter 7 Stop Collection Calls and Lawsuits?
Filing a bankruptcy petition generally triggers the automatic stay, which prohibits most creditors from continuing many types of collection activity while the bankruptcy case is pending.
Depending upon the circumstances, the automatic stay may stop or temporarily prevent activities such as:
- collection calls and letters;
- certain lawsuits;
- collection judgments;
- wage garnishments; and
- other qualifying collection efforts.
There are exceptions and limitations to the automatic stay, so the effect on a particular collection action should be evaluated individually.
What Happens During a Chapter 7 Bankruptcy?
A Chapter 7 case generally involves gathering detailed information concerning your income, expenses, assets, debts, property, and recent financial transactions.
After the bankruptcy petition and required schedules are filed, a Chapter 7 trustee is appointed to administer the case.
Most debtors must also attend a meeting commonly called the 341 meeting or meeting of creditors. The trustee may ask questions about the bankruptcy documents, assets, debts, income, and other financial information.
If the requirements of the Bankruptcy Code are satisfied and no issue prevents discharge, qualifying debts may ultimately be discharged.
How Long Does Chapter 7 Bankruptcy Take?
Although the timeline varies, many routine Chapter 7 cases can be completed within several months.
Cases involving unusual assets, disputes, creditor objections, incomplete information, or other complications may take longer.
During your case, we explain what to expect and help you navigate each stage of the Chapter 7 process.
Is Chapter 7 Bankruptcy Right for Me?
Bankruptcy is not the right solution for everyone.
For some people, Chapter 7 can eliminate significant unsecured debt and provide the opportunity for a genuine financial fresh start. For others, the nature of their debts, income, assets, or financial objectives may make another approach more appropriate.
A bankruptcy consultation should involve more than simply determining whether you can file. It should help you determine whether filing actually makes sense for your circumstances.
Talk With a Chapter 7 Bankruptcy Attorney
If debt has become unmanageable, getting accurate information about your options can be an important first step.
We represent individuals in Chapter 7 bankruptcy matters in Huntsville and North Alabama. We can review your financial circumstances, discuss the types of debt you owe, evaluate issues involving your property, and help you understand what Chapter 7 bankruptcy could mean for you.
Contact us to schedule a Chapter 7 bankruptcy consultation.
