2022 Bankruptcy Guide in Alabama

bankruptcy lawBankruptcy is challenging to navigate regardless of whether you have help or are on your own, filing pro se. Though all bankruptcy can differ from state to state, the Department of Justice at the federal level handles all the bankruptcy. If you live in the Heart of Dixie and need an Alabama bankruptcy lawyer—Loris Bankruptcy Law Firm can help and is only a phone call away.   

Types of Bankruptcy in Alabama

Filing bankruptcy in Alabama does not have to be an ordeal. An Alabama bankruptcy lawyer can help you figure out your individual needs and help navigate the different types of bankruptcy, organized into chapters you can consider filing for.

For Individuals and Businesses in Alabama

As an individual or business, there are three main types of bankruptcy that you can consider filing for.

  • Chapter 7 – Chapter 7 bankruptcy Alabama is a liquidation of all assets and personal property used to repay debts.
  • Chapter 11 – Known as a “large reorganization,” designed to allow a business to stay in operation while negotiating with creditors to establish a repayment plan
  • Chapter 13 – This is a repayment plan known as a wage earners plan, where individuals with reliable income repay their debt over three to five years and meet other obligations such as credit counseling. This allows the retention of certain personal property.

Other Types of Bankruptcy

Other types of bankruptcy are broadly applicable when there are special circumstances surrounding the bankruptcy and repayment of debt.

  • Chapter 9 – This is for municipalities in Alabama to negotiate repayment of debts and financial obligations with creditors.
  • Chapter 12 – Known as the “family farmers bankruptcy.” This is for farmers and fishermen to reorganize a business to repay debt while still retaining the business and operating it to continue repaying debt.
  • Chapter 15 – This is the type of bankruptcy used in cases of foreign bankruptcy filings to resolve any outstanding debts in the United States.

How to File Bankruptcy in Alabama

Bankruptcy proceeds similarly at the beginning of any type of bankruptcy you are filing for.

You will file with a federal court and need to submit a petition to initiate the proceedings. Then you must submit numerous forms and information about your financial status and holdings. You need to declare every asset you own and be fully transparent.

Eventually, an appointed trustee is responsible for the case and ensures the fulfillment of proper repayments and the upholding of all terms of the filing to the court’s standards.

Exemptions in Bankruptcy

Some possible exemptions can apply to assets designed to allow you to retain the things you need to survive bankruptcy. The exemptions include any professional tools, clothing, and, in certain instances, a vehicle to allow you to work. These can help you comply with the terms of the bankruptcy.

The Homestead Exemption is a specific exemption that allows you to retain up to $250,000 worth of equity that you may have held in your house. Anything over that amount gets liquidated and used to help repay the terms of the agreement. This allows the filer to keep their residence during bankruptcy.

If you are facing bankruptcy in Mobile Alabama, seeking an Alabama bankruptcy lawyer is useful to help sort all these things out. They can help navigate the intricacies and details that bankruptcy involves. If you are in Alabama and looking for some bankruptcy guidance, call the Loris Bankruptcy Law Firm, whose friendly staff will be there for you when you need them the most.