Filing For Chapter 13 In Alabama

In 2009, there were nearly 35,000 people filing for bankruptcy in Alabama, making it fourth in the nation in that statistic. In addition, Alabama was 25th in the nation in unemployment. Those two statistics reveal why many Alabama citizens are still facing the possibility of having to take that costly step. While there are severe consequences resulting from filing for either chapter 7 or chapter 13 bankruptcy, in some cases, the benefits can outweigh the negatives.

Choosing Chapter 13 Bankruptcy

With the bankruptcy reforms of 2005, it is now more difficult to qualify for chapter 7 bankruptcy, and higher payments are required for those filing chapter 13. However, chapter 13 can still be a good choice for some people who

• Want to keep their property and have too much equity to claim it under chapter 7 exemptions

• Have regular disposable income, but it is not sufficient to pay all of their debt obligations

• Want to simplify the payment process, making one monthly payment to the bankruptcy trustee who divides that payment up between the creditors

• Want to discharge most or all of their debts within a three- to five-year period

Completing the Chapter 13 Process in Alabama

Once a filer has qualified for chapter 13 bankruptcy in Alabama, they must complete the required forms and pay the necessary fees. The process then includes:

• An automatic stay, or hold, on all debt collection processes by their creditors unless they petition the court to lift the stay and that petition is granted to individual creditors

• Devising a repayment plan. For those with a lower income, that plan may only last three years; however, for those with higher incomes, that period may last five years. The bankruptcy trustee must approve the plan, which must fulfill priority debts (such as tax bills, support payments, and some school loans) first, arrearages on secured debts, and regular debts that may be “crammed down” to equal the current value of the property

• Completing budget counseling by an approved counselor

• Discharging those debts that are eligible once the repayment plan is complete

Getting Legal Help with Chapter 13 Bankruptcy in Alabama

There appear to be a few simple steps to chapter 13 bankruptcy in Alabama; however, these processes can be much more complex than they appear. While there are many benefits, there are also many negative consequences that a filer may not be aware of without the help of an experienced bankruptcy attorney.