In Alabama, bankruptcy is a clear opportunity for becoming debt-free and minimizing a high volume of debts. Consumers and businesses choose between the chapter and determine what chapter is most ideal for their financial circumstances. The chapters have strict requirements and guidelines that all claimants must follow. A Bankruptcy Attorney in Tallassee, AL assists claimants in reviewing bankruptcy law and choosing the most appropriate chapter for the case.
The Prerequisites of Bankruptcy
All consumers are required to complete a state-approved credit counseling course. It prepares the claimant for bankruptcy and life after the case is discharged. A certificate of completion is shown to the court to ensure that the consumer completed all the necessary steps before starting the bankruptcy claim.
The Means Test
For chapter 7 bankruptcy, the means test determines if the claimant has an income that is below the median for their household size. If it isn’t, the consumer isn’t qualified for chapter 7 because they have the financial means to pay off their debts.
For chapter 13 bankruptcy, the means test determines if the claimant has an income that is greater than the median for their household size. If it isn’t, the consumer doesn’t qualify for chapter 13.
What Happens During Chapter 7?
In chapter 7, the court evaluates all assets owned by the consumer. The court chooses what assets are sold through the liquidation process. A trustee manages the sale of the assets and distributes the proceeds to each creditor. The automatic stay for the bankruptcy lasts up to six months. For some consumers, the process renders them completely debt-free.
What Happens During Chapter 13?
In chapter 13, a new structured payment plan is created for the consumer to settle their debts over time. The process requires the claimant to pay a monthly payment according to the terms of the bankruptcy plan. All disposable income is used to pay off debts that were not included in the bankruptcy claim. The automatic stay lasts up to five years depending on the duration of the case.
In Alabama, bankruptcy provides legal assistance for consumers and businesses facing overwhelming debt. Filing a claim helps claimants avoid immediate legal action from creditors and protect specific assets. Consumers or businesses that want to learn more about bankruptcy contact a Bankruptcy Attorney in Tallassee, AL through Courtney & Mann LLP right now.
