When debt becomes overwhelming, it can feel like you’re stuck in a cycle with no way out. If you’re living in Northeast Alabama and struggling to keep up with bills, Chapter 7 bankruptcy may offer the fresh start you’re looking for.
This guide will walk you through how Chapter 7 bankruptcy in Alabama works. We’ll discuss what to expect, how to qualify, and what it can (and can’t) do for you. Whether you’re in Anniston, Gadsden, or a nearby community, this overview is here to answer your questions in plain English.
What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a legal process that allows individuals to discharge (wipe out) most of their unsecured debts, such as credit card balances, medical bills, payday loans, and utility arrears. It’s often referred to as a “liquidation bankruptcy,” though in most consumer cases, you don’t actually lose your belongings.
Once you file, an automatic stay will be placed to put a stop to collection calls, wage garnishments, lawsuits, and repossessions while your case is reviewed by the court.
Who Can File Chapter 7?
Eligibility is more straightforward than people assume. Here’s what you’ll need to file in Alabama:
- Meet income requirements based on your household size and the state median. If your income is too high, you may still qualify after passing the means test.
- Complete a credit counseling course from an approved agency within the 180 days before filing. This usually takes about an hour and costs around $50.
- Wait between filings. If you’ve filed bankruptcy before, there are time limits that may apply before you’re eligible again.
If you’re unsure whether you qualify, we can help you walk through the numbers.
What Does It Cost to File Chapter 7?
TThe basic court filing fee for Chapter 7 is $338. In some cases, you may be eligible for a waiver or a payment plan if paying upfront is a burden.
Other expenses include:
- Credit Counseling Course: About $50 (required before filing)
- Financial Management Course: Also around $50 (required before discharge)
- Attorney Fees: This varies the most depending on the complexity of your case and the attorney’s experience. We strive to keep our fees reasonable for the services we provide, understanding the difficulties our clients are facing. Book a free consultation now to learn more about the fees for your particular situation.
The majority of clients find that paying an attorney makes the process far less stressful and helps avoid mistakes that could delay or derail their case.
The Bankruptcy Process Step by Step
Here’s what to expect from the bankruptcy process if you decide to file Chapter 7:
- Consultation: Meet with an attorney to review your debt, income, and assets.
- Credit Counseling: Complete the required course and get your certificate.
- Filing: Your attorney will file your bankruptcy petition with the court.
- Automatic Stay: Creditors must stop collection activity immediately.
- 341 Meeting: You’ll attend a brief meeting (by phone or in person) with a bankruptcy trustee.
- Financial Management Course: Complete this second course before discharge.
- Discharge: If all goes smoothly, your eligible debts will be discharged in about 3 to 6 months.
What Chapter 7 Can and Can’t Do
Before you file, it helps to know what Chapter 7 bankruptcy can actually accomplish.
Chapter 7 can help you:
- Erase unsecured debt like credit cards, medical bills, and payday loans
- Stop creditor harassment and wage garnishments
- Halt repossessions and foreclosures temporarily
- Give you a clean financial slate
However, it usually won’t erase:
- Most student loans
- Child support or alimony
- Recent tax debts
- Debts from fraud or criminal activity
That’s why it’s helpful to meet with an experienced local attorney who can walk you through how Chapter 7 bankruptcy in Alabama applies to your specific situation.
What About My Property?
Alabama’s exemption laws protect many types of property, including your home, vehicle, retirement accounts, and personal belongings, up to certain limits. In many cases, clients filing for Chapter 7 don’t lose any property at all.
We’ll work with you to determine which of your assets are protected before you ever file.
Is Chapter 7 Right for Me?
Filing bankruptcy is a personal decision. For some, it’s a reset button that helps stop the bleeding and reduce stress. For others, there may be alternatives worth exploring first, such as debt consolidation or Chapter 13.
That’s why it’s important to view this Chapter 7 guide as a starting point, not the final word. Every case is unique. We’re here to help you figure out your next step.
Let’s Talk About Your Options
If you live in Anniston, Gadsden, or anywhere in Northeast Alabama and are thinking about bankruptcy, don’t wait until you’re out of options. Chapter 7 may offer the relief and fresh start you’ve been needing.
At Jennings & Messer, P.C., we provide honest guidance and personalized support to help you get through the process and move forward with more peace of mind.Take our bankruptcy questionnaire and then schedule a free consultation today and find out whether Chapter 7 is right for you.