Chapter 7 vs. Chapter 13 Bankruptcy in Alabama: Which Is Right for You?
The right bankruptcy solution depends on your income, assets, and long-term goals—but both chapters offer powerful protection under federal and Alabama law. Understanding how these options work can empower you to make the right choice for your family.
If you need to stop collections or save your home, prompt legal help can make all the difference. The Loris Law Firm offers experienced guidance and local support for Chapter 7 and Chapter 13 bankruptcy cases in Mobile, AL and the surrounding region. Schedule a free consultation today.
Fast Debt Discharge for Alabama Families
For individuals and couples who need to quickly eliminate unsecured debt, Chapter 7 bankruptcy in Alabama is often the preferred route. Known as “liquidation bankruptcy,” this process enables qualified applicants to discharge most unsecured debts—credit cards, medical bills, old utility accounts—typically within a few months. Eligibility is based on the “means test,” which compares your income to the state median.
Advantages of Chapter 7 bankruptcy in Alabama:
- Rapid Debt Elimination – The process usually takes less than six months from start to finish.
- Fresh Start – Most unsecured debts are wiped clean, allowing you to move forward without the burden of old bills.
- Asset Protections – Alabama exemptions shield certain property, including a primary residence up to a statutory value and personal items.
- No Repayment Plan Required – Unlike Chapter 13, there’s no ongoing payment to creditors.
However, not everyone will qualify—higher-income households may need to consider Chapter 13 instead. Explore more details about Chapter 7 bankruptcy and asset exemptions with the help of the best bankruptcy attorney in Mobile, Alabama.
Asset Protection and Payment Plans for Alabama Families
Chapter 13 bankruptcy is often called “reorganization bankruptcy.” This option is designed for Alabamians who want to retain valuable assets—like a home or vehicle—while catching up on missed payments over time. Rather than liquidating property, you propose a court-approved repayment plan (lasting three to five years) that fits your budget. Chapter 13 may be the right fit if:
- You have regular income and want to keep your home, car, or other assets.
- You have fallen behind on mortgage or auto payments and need time to catch up.
- You need legal protection from foreclosure or repossession while repaying debts in manageable monthly installments.
Filing Chapter 13 in Alabama immediately stops foreclosure and creditor actions through the automatic stay. This relief allows you to cure arrears, restructure certain obligations, and retain ownership of your property—often with payments far lower than the original terms.
What Sets Chapter 7 and Chapter 13 Apart?
When comparing Chapter 7 vs. Chapter 13 bankruptcy in Alabama, several key distinctions stand out:
- Who Qualifies? Chapter 7 requires passing the means test, while Chapter 13 is available to those with steady income and debts below federal limits.
- How Fast Is Relief? Chapter 7 delivers quick discharge (usually within six months); Chapter 13 stretches repayment over three to five years.
- What Happens to My Property? Chapter 7 may involve selling non-exempt assets, while Chapter 13 lets you keep most property as long as you stick to the plan.
- Impact on Credit Report: A Chapter 7 filing remains for ten years, while Chapter 13 is reported for seven years.
- Types of Debt Resolved: Both options handle most unsecured debts. Chapter 13 can also address secured debts (like mortgages) and certain priority debts over time.
Choosing the right approach should be guided by a bankruptcy lawyer in Mobile, Alabama who understands both the law and your unique situation.
Start Again with a Trusted Alabama Bankruptcy Lawyer
For anyone struggling with debt in Mobile or Selma, the Loris Bankruptcy Law Firm offers proven strategies, attentive service, and deep knowledge of Alabama bankruptcy law. Discover the relief and protection you deserve—schedule a free case review with a bankruptcy attorney in Mobile Alabama, and let your fresh start begin. Contact us today.