Chapter 7

Alabama Bankruptcy Lawyers | Crumbley-Blackwell-Price Attorneys

If you are considering filing for bankruptcy to remove your debts, then you may be wondering which type of bankruptcy you should file. There are two common bankruptcy chapters for consumers: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is known as liquidation bankruptcy because debts are cancelled after all non-exempt property is liquidated.

To file Chapter 7 bankruptcy in the State of Alabama, the government requires that you meet certain specifications:

• Your income must be below a certain level
  You must take the means test, which will calculate your income, expenses, and debt burden over the last six months.
• You will need to complete a credit counseling course.
• Please note that you will not be eligible for Chapter 7 if you already received a bankruptcy discharge within the last six to eight years.

After determining if you are eligible for Chapter 7, you can then file a bankruptcy petition with your local bankruptcy court. Upon filing, an automatic stay on your creditors will go into effect, which will prevent them from collecting any further debts through wage garnishment, foreclosure, repossession, or any other means. The court takes control over your property, so you may not sell or give away any property after filing, with a few exceptions.

The court will appoint a trustee to oversee your case and hold a creditors meeting. Your non-exempt property will then be sold for cash to pay your creditors, and your debts will be discharged. Some debts are not able to be discharged, such as child support, student loans, or tax debt.