Introduction
Filing for bankruptcy can be a complex and overwhelming process, but understanding the steps involved is crucial. If you are considering filing for bankruptcy in Alabama, this article will guide you through the process and provide you with the necessary information to make informed decisions.
Types of Bankruptcy
Chapter 7 Bankruptcy: Chapter 7 bankruptcy, also known as liquidation bankruptcy, is the most common type of bankruptcy filed by individuals. It involves the liquidation of non-exempt assets to repay creditors. To qualify for Chapter 7 bankruptcy in Alabama, you must pass the means test, which compares your income to the state’s median income.
Chapter 13 Bankruptcy: Chapter 13 bankruptcy, also known as reorganization bankruptcy, allows individuals with a regular income to create a repayment plan to pay off their debts over a period of three to five years. This type of bankruptcy is suitable for individuals who want to keep their assets and catch up on missed payments.
Pre-Filing Requirements
Before filing for bankruptcy in Alabama, there are several pre-filing requirements that must be fulfilled:
Credit Counseling: Under the Bankruptcy Abuse Prevention and Consumer Protection Act, individuals must complete a credit counseling course from an approved agency within 180 days before filing for bankruptcy.
Means Test: As mentioned earlier, the means test compares your income to the state’s median income to determine your eligibility for Chapter 7 bankruptcy. If your income is below the median, you qualify. If it is above the median, further calculations are required to determine your eligibility.
Bankruptcy Forms: You will need to complete various bankruptcy forms, including the petition, schedules, and statements, which provide detailed information about your financial situation, assets, debts, income, and expenses.
Filing for Bankruptcy
Once you have fulfilled the pre-filing requirements, you can proceed with filing for bankruptcy in Alabama:
Bankruptcy Court: You will need to file your bankruptcy petition and other required documents with the United States Bankruptcy Court for the Northern, Middle, or Southern District of Alabama, depending on your place of residence.
Automatic Stay: Once your bankruptcy petition is filed, an automatic stay goes into effect, which prevents creditors from taking any further collection actions against you. This includes halting wage garnishments, foreclosure proceedings, and harassing phone calls.
Meeting of Creditors: Approximately 20-40 days after filing, you will attend a meeting of creditors, also known as a 341 meeting. This meeting allows the bankruptcy trustee and creditors to ask you questions about your financial situation. It is important to be honest and provide accurate information during this meeting.
Conclusion
Filing for bankruptcy in Alabama involves understanding the different types of bankruptcy, fulfilling pre-filing requirements, and completing the necessary paperwork. It is essential to consult with a qualified bankruptcy attorney to ensure you navigate the process correctly and make the best decisions for your financial situation.
References
– alnb.uscourts.gov
– alabar.org
– justice.gov
