August 2024

Next up in our “Back to Basics” series, we want to break down one of the most common forms of personal bankruptcy: Chapter 7. Ultimately, Chapter 7 bankruptcy offers a fresh start to residents across Alabama by discharging most unsecured debts (we’ll explain what this means below). So, if you’re an Opelika, Alabama resident seeking freedom from overwhelming debt, here is how Chapter 7 bankruptcy could help from David S. Clark, a personal bankruptcy attorney in Opelika, Alabama. 

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy, also known as “liquidation bankruptcy”, is designed for individuals who are unable to repay their debts. Unlike Chapter 13, this specific chapter of bankruptcy isn’t based on a personalized repayment plan. Yet, it is essential to note that Chapter 7 does not discharge every single debt, instead it typically only clears “unsecured” debts which includes (but is not limited to) the following: 

• Credit Card Balances
• Medical Bills
• Personal Loans
• Utility Bills

Also, in return to this discharge, the bankruptcy trustee may sell some of your non-exempt assets to pay off your creditors.

How Does Chapter 7 Bankruptcy Work?

In terms of the timeline of events, Chapter 7 always begins with a petition to a local bankruptcy court. In this case, in Opelika, much like the rest of Alabama, this petition for bankruptcy also requires you to provide detailed information about your unique financial situation. This must include your income, expenses, assets, debts, and more. Ultimately, this information will be used to determine if you qualify for Chapter 7 bankruptcy under the “means test”. 

The means test compares your income to the median income for a household of your size in Alabama. If your income is below the median, you typically qualify for Chapter 7. If your income is above the median, you may still qualify, but you’ll need to provide additional information to demonstrate that you can’t afford to repay your debts under a Chapter 13 repayment plan (the other chapter of personal bankruptcy).

Once your petition is filed, an automatic stay goes into effect, preventing creditors from pursuing collection actions against you. This means that creditors must stop calling, sending collection letters, or initiating lawsuits while your bankruptcy case is pending.

What Happens to Your Assets?

Typically, and understandably so, one of the most common concerns of bankruptcy is the potential loss of assets. Thankfully, while it’s true that your appointed bankruptcy trustee may sell some of your property to pay off unsecured debts, many assets are protected by Alabama law. These exemptions can include your home, car, personal belongings, and certain retirement accounts. Yet, every bankruptcy case is different, so it is essential to work with an experienced bankruptcy attorney who can help you understand further. 

How Long Does Chapter 7 Bankruptcy Take?

The Chapter 7 process is relatively quick compared to other forms of bankruptcy. Most cases are completed within four to six months from the date of filing. After your case is discharged, you are no longer legally obligated to repay the discharged debts, allowing you to focus on rebuilding your financial future.

David S. Clark – Your Chapter 7 Bankruptcy Attorney in Alabama

In conclusion, if you’re struggling with the weight of debt, Chapter 7 bankruptcy may be the second chance you need to find financial freedom. Yet, it is essential to seek advice from a dedicated personal bankruptcy attorney throughout this process. That’s where a local Chapter 7 and Chapter 13 bankruptcy attorney like David S. Clark can provide the help you need! 

If you’re ready to start the journey towards financial freedom, contact the team at David S. Clark in Opelika, Alabama today! 

David S. Clark takes you “back to basics” with a breakdown of Chapter 13 bankruptcy

Bankruptcy can be a daunting word, but it can also be the best way to regain financial control. If you’re an Opelika or Auburn, Alabama resident and seeking an escape from the weight of overwhelming debt, here is a quick and easy breakdown on Chapter 13 bankruptcy from David S. Clark, a Chapter 7 and Chapter 13 bankruptcy attorney in Opelika, Alabama. 

What is Chapter 13 Bankruptcy?

Often referred to as a “wage earner’s plan”, Chapter 13 bankruptcy is a chapter of personal bankruptcy that allows individuals with an income to establish a plan to repay all or parts of their debt. This functions differently than Chapter 7, which involves liquidating certain assets, like a house or car, to pay off debts. Essentially, Chapter 13 allows you to keep your property and assets while consolidating your debt into monthly payments, typically over the course of 3 to 5 years. 

How Does Chapter 13 Work?

Before moving forward with Chapter 13 bankruptcy, it is essential to find a Chapter 13 bankruptcy attorney who understands your unique financial situation. Furthermore, a local Alabama bankruptcy lawyer will understand the often complex nature of bankruptcy, providing you with valuable information, encouragement, and help. 

So how does it work? Ultimately, when you file for Chapter 13 bankruptcy in Opelika, the process begins with a petition to the bankruptcy court. This is also where you must provide a detailed financial report that includes your assets, liabilities, income, expenses, and a proposed repayment plan.

As mentioned above, the repayment plan typically lasts between three to five years, with the exact timing depending on your income level. During this time, you will make monthly payments to a dedicated bankruptcy trustee, who then distributes the funds to your creditors according to the court-approved repayment plan. 

Who Qualifies for Chapter 13 Bankruptcy?

Unfortunately, this question isn’t as simple as it may seem. Bankruptcy is a complicated and unique option for every individual struggling with debt. So, it is crucial to talk to your dedicated Chapter 13 bankruptcy attorney about your options, and if you qualify for those options before moving forward. 

Benefits of Chapter 13 Bankruptcy

Filing for Chapter 13 bankruptcy in Auburn or Opelika, Alabama offers several key benefits:

1. Asset Protection: Unlike Chapter 7, you can keep your home, car, and other assets while repaying your debts over time.
2. Debt Consolidation: Chapter 13 consolidates your debt into one monthly payment, simplifying your finances and providing much-needed relief. 
3. Foreclosure Prevention: Chapter 13 stops foreclosure proceedings, allowing you to catch up on your mortgage.
4. Reduced Creditor Harassment: Once you file for bankruptcy, an automatic stay is put in place, preventing creditors from harassing you or attempting to collect debts.

Is Chapter 13 Right for You?

Much like the rest of this blog, this question requires time and effort to figure out. Yet, don’t be intimated by it! You don’t have to walk through this process of reaching financial freedom alone.

In conclusion, Chapter 13 bankruptcy is a powerful tool for those who are committed to repaying their debts but need more time or flexibility. David S. Clark is a bankruptcy attorney who not only understands the need for that flexibility but strives to fight alongside you. 

If you’re searching for a Chapter 13 bankruptcy attorney in Opelika, Alabama, look no further than David S. Clark. Ready to get started? Reach out to David S. Clark today!