Many people assume that filing for bankruptcy is a financial death sentence that should be avoided at all costs. They may even believe that if you file for bankruptcy, you will lose everything you own in addition to your future prospects.
However, that perception couldn’t be farther from the truth. Bankruptcy is not a shameful, life-ruining disaster. Rather, it’s a financial tool that is designed to be used by people who have accumulated an unmanageable amount of debt and need a financial fresh start. Moreover, while it is possible to lose certain higher-value assets in a bankruptcy, many people are able to go through bankruptcy without losing any assets at all.
Chapter 7 Bankruptcy, sometimes known as “straight bankruptcy”, is the most common type of bankruptcy. In order to qualify, your income must be less than the average income in your county and in the State of Alabama for a household of a similar size. For reference, in 2020, the median income in Alabama for a family of three was $68,554.
When you file for Chapter 7, all of your unsecured debts will be discharged, meaning you will no longer be responsible for paying them. Filing for Chapter 7 triggers an automatic stay, stopping all collections on those debts—including calls, letters, foreclosures, repossessions, and wage garnishment—until the bankruptcy case is resolved. Most types of debt are dischargeable through Chapter 7 Bankruptcy, including credit card debt, medical debt, and personal debt. Other types of debt cannot be discharged through Chapter 7, including student loans, mortgages, and alimony/child support payments.
In exchange for discharging all your unsecured debts, Chapter 7 Bankruptcy is designed to liquidate assets in order to pay off your creditors. However, most people who file Chapter 7 can declare all or nearly all of their assets “exempt” from being liquidated. This means that many filers can keep all or nearly all of their possessions.
Exemptions from Chapter 7 Bankruptcy in Alabama may include:
Are you dealing with an unmanageable amount of debt? Are you considering Chapter 7 Bankruptcy in Birmingham, Alabama? Birmingham Bankruptcy Attorney John Clark is here to help. Call (205) 506-3354 for a Personalized Case Evaluation on your case today.