Even after struggling to pay bills at the end of every month, making the decision to file for bankruptcy in Alabama can be overwhelming. One issue is deciding which type of bankruptcy to file for the particular situation. Chapter 7 and Chapter 13 bankruptcy plans have different benefits. A Chapter 7 bankruptcy is fairly quick and takes just a few months to complete the process. The downside of a Chapter 7 is that people with more assets could lose them, including their home. As another option, they may be able to save their home from a foreclosure by going with a Chapter 13 bankruptcy which may allow them to keep their home and vehicle. It is helpful to obtain bankruptcy legal services in Birmingham, Alabama when trying to resolve financial problems and deciding which bankruptcy is appropriate because of the differences and complexities of these two types of bankruptcies.
What Is An Automatic Stay?
In both a Chapter 7 and a Chapter 13 bankruptcy, an automatic stay is initiated as soon as the bankruptcy case is filed. Once the automatic stay is in place, you and your assets are protected from creditors. The stay brings an end to annoying contact phone calls and letters from creditors, threats of monetary garnishment and repossession of vehicles, and possibly foreclosure.
The relief provided by the automatic stay in a Chapter 7 is short-term and may not allow you to keep your home if you are close to a foreclosure. With a Chapter 13 bankruptcy, there may be a solution to avoiding foreclosure and keep your home if you are able to continue making your mortgage payments and catch up on the arrears related to the mortgage during the repayment phase of the bankruptcy.
What Is Involved In A Chapter 13 Repayment Plan?
In a Chapter 13 bankruptcy, you and your attorney develop a three- to- five- year repayment plan. There is a requirement that you must have enough funds to make the monthly payment plus an extra sum that will allow you to completely catch up on your mortgage debt within the time frame of the proposed repayment plan. The plan allows the payments to be spread out over time to be more manageable and avoid late payment fees and other penalties and charges.
A Chapter 13 bankruptcy offers benefits that are not available in a Chapter 7 such as keeping your property. Your home is safe from foreclosure and your vehicle cannot be repossessed. It may even be possible to force a creditor into a payment plan if you need extra time to repay a debt that cannot be discharged in bankruptcy. The downside of a Chapter 13 is that it is expensive and not many people can make the required monthly payment.
What Other Issues Can Result From Filing For A Bankruptcy?
There are serious consequences associated a bankruptcy such as having it appear on your credit reports and having difficulty getting loans in the future. Another issue is trying to decide between a Chapter 7 and Chapter 13 bankruptcy which can be confusing. A Chapter 7 and Chapter 13 attorney can help you understand the long-term repercussions as well as the pros and cons of each type of bankruptcy for your situation. Because filing for a bankruptcy is complicated and needs to be done correctly to avoid problems, it is wise to seek the help of an experienced in bankruptcy proceedings attorney in Alabama.