What Happens to Debt After Filing for Bankruptcy?
It is a familiar feeling – the weight of debt pressing down on you, making it difficult to breathe. You are not alone. Thousands of people just like you are struggling with the same burden. That is where Loris Bankruptcy Law Firm comes in, providing compassionate guidance for those considering filing bankruptcy in Alabama. But what happens to your debt after filing for bankruptcy? Let us find out.
Dealing With Debt: Bankruptcy Options
There are several types of bankruptcy, with Chapter 7 and Chapter 13 being the most common for individuals. Each type affects your debt differently, so understanding the basics of these options is crucial. Knowing the difference between these bankruptcy types and how they affect your financial situation can help you make an informed decision for a brighter future.
Bankruptcy Chapter 7: Liquidation
In a Chapter 7 bankruptcy, your non-exempt assets are liquidated to pay off your debts. The remaining unsecured debts are then discharged, giving you a fresh start. Typically, this process takes around four to six months. Notably, Bankruptcy Chapter 7 Mobile, AL, is best suited for individuals with limited income and assets who cannot repay their debts through a structured repayment plan.
Chapter 13 Bankruptcy: Reorganization
Chapter 13 bankruptcy allows you to create a repayment plan to pay off your debts over three to five years. This plan allows you to keep your assets, like your home and car, while gradually reducing your debt. Moreover, Chapter 13 bankruptcy is an ideal option for those with a steady income, as it provides a more manageable way to repay debts while still retaining valuable possessions.
Your Debt After Filing Bankruptcy
The outcome of your debt after filing bankruptcy in Alabama depends on the type of bankruptcy you choose.
Your Debt After Filing Chapter 7 Bankruptcy
Most unsecured debts, like credit card debt and medical bills, will be discharged. However, some debts, such as student loans, child support, and taxes, are generally not dischargeable. It is essential to consult with a knowledgeable bankruptcy attorney to understand which of your debts can be eliminated and which will remain your responsibility after filing for Chapter 7.
Your Debt After Filing Chapter 13 Bankruptcy
Your repayment plan will address your debts, with some being paid in full and others partially paid or not paid at all. Once the repayment period is over, any remaining dischargeable debts will be wiped out. Additionally, successful completion of a Chapter 13 repayment plan can positively impact your credit score, as it demonstrates a consistent effort to repay outstanding debts.
Navigating Mobile Alabama Debt Consolidation
Debt consolidation in Mobile, AL, is an alternative to bankruptcy, which involves taking out a new loan to pay off your existing debts. This strategy can help you manage your debt more effectively by simplifying your payment process and potentially reducing interest rates. However, debt consolidation may not be the best option for everyone. Loris Bankruptcy Law Firm can help you assess your financial situation and determine if this is the right choice for you.
Chart Your Financial Comeback With Loris Bankruptcy Law Firm
Navigating the complexities of bankruptcy can be daunting, but you do not have to do it alone. Loris Bankruptcy Law Firm has years of experience helping individuals in Mobile, Alabama, find the best solution for their financial struggles.
Our team will guide you through the entire process, providing personalized support and advice tailored to your unique situation. With a deep understanding of bankruptcy laws and a commitment to client satisfaction, we strive to alleviate the stress and anxiety associated with financial difficulties.
If you are ready to take control of your financial future, let Loris Bankruptcy Law Firm help. Call our offices today for a consultation.