Am I Eligible to Receive a Discharge in A Chapter 7 Bankruptcy Case?

Dealing with financial problems can be really tough, making it hard to figure out the best way to get out of debt. Chapter 7 bankruptcy is one option that can help people overwhelmed by debt by wiping out certain unsecured debts, like credit card balances or medical bills, giving them a chance to start over. But, not everyone can qualify for a Chapter 7 bankruptcy case; there are specific rules you have to meet, which means you need to look closely at your situation to see if you can apply.

Understanding Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, entails the sale of a debtor’s non-exempt assets by a trustee. The proceeds are then distributed to creditors as part of the debt relief process. Importantly, this option provides a path to eliminate most types of unsecured debt, such as credit card debt, medical bills, and personal loans, thereby offering a financial reset.

Eligibility Criteria for Chapter 7 Discharge

To be eligible for a Chapter 7 bankruptcy case discharge in Alabama, you must meet several specific requirements. Here’s an overview of what’s needed:

  • Pass the Means Test

The Means Test compares your average monthly income for the six months before filing to the median income for a household of your size in Alabama. If your income is below the median, you pass. If above, you may still qualify based on allowed expenses and debts.

  • Receive Credit Counseling

You must complete a credit counseling course from an approved agency within 180 days before filing for bankruptcy. This course is designed to help you understand the process and assess your financial situation.

  • File Accurately

All required documents and forms must be correctly filled out and filed with the bankruptcy court in Alabama. This includes schedules of assets and liabilities, a statement of financial affairs, and more.

  • Attend the 341 Meeting

Also known as the creditors’ meeting, this is where the bankruptcy trustee and any interested creditors can ask you questions about your bankruptcy forms and financial situation. You must attend and answer questions truthfully.

  • Complete a Debtor Education Course

After filing, you must complete a debtor education course, also from an approved agency, and submit the certificate of completion to the court. This course focuses on financial management skills.

  • No Recent Bankruptcy Discharges

You are not eligible for a Chapter 7 discharge if you have received a discharge in a Chapter 7 case filed within the last eight years or a Chapter 13 case filed within the last six years.

  • No Dismissed Bankruptcy Cases

If a previous bankruptcy filing was dismissed within the last 180 days due to your willful failure to appear in court or comply with court orders, or you voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens, you’re not eligible.

  • No Fraud or Abuse

Eligibility may be denied if the court finds that you have attempted to defraud your creditors or the bankruptcy process itself.

Meeting these requirements can make you eligible for a Chapter 7 bankruptcy discharge in Alabama, which relieves you of the obligation to repay many of your debts. However, debts like alimony, child support, certain taxes, and student loans typically cannot be discharged in bankruptcy. Consult with a bankruptcy attorney in Mobile, AL to guide you through the process accurately and to ensure that Chapter 7 is the best option for your financial situation.

Your Path to Debt-Free Living

Facing a Chapter 7 bankruptcy case can be overwhelming, but with the right legal guidance, it offers a fresh start. Loris Bankruptcy Law Firm in Mobile, AL, provides clear direction and support, making the process manageable and aiming for the best possible outcome. If you’re struggling with debt in Alabama, reaching out to a Mobile, AL bankruptcy attorney could be your first step toward a debt-free life. 

Their team simplifies the legal steps and helps you navigate your financial recovery with confidence. Contact us today to start your journey to financial freedom by contacting a bankruptcy attorney in Mobile, AL for a consultation.