Chapter 13 bankruptcy is a type of bankruptcy that allows individuals with regular income to reorganize their debts and create a repayment plan over a period of three to five years. This type of bankruptcy is often used by individuals who have fallen behind on their mortgage payments, car payments, or other debts and want to catch up on payments while keeping their property.
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The purpose of this blog post is to provide information about Chapter 13 bankruptcy in Alabama, including eligibility requirements, benefits, the bankruptcy process, and common questions.
Overview Of The Bankruptcy Process
The bankruptcy process involves filing a petition with the bankruptcy court, attending a meeting of creditors, creating a repayment plan, and ultimately receiving a discharge of eligible debts. The process of bankruptcy discharge can take several months to complete, and it is important to have a knowledgeable bankruptcy attorney to guide you through the process.
Eligibility for Chapter 13 Bankruptcy in Alabama
Debt Limits
In Alabama, there are debt limits for Chapter 13 bankruptcy. As of 2021, the unsecured debt limit is $419,275, and the secured debt limit is $1,257,850. If your debts exceed these limits, you may not be eligible for Chapter 13 bankruptcy.
Income Requirements
To be eligible for Chapter 13 bankruptcy, you must have a regular income. This can come from a job, self-employment, or other sources. Your income must also be sufficient to cover your living expenses and the payments required under your repayment plan.
Other Eligibility Criteria
In addition to debt and income requirements, you must also meet other eligibility criteria to file for Chapter 13 bankruptcy in Alabama. This includes completing credit counseling within 180 days before filing bankruptcy again, not having had a bankruptcy case dismissed within the past 180 days, and not having filed for Chapter 7 bankruptcy within the past four years or Chapter 13 bankruptcy within the past two years.
Benefits of Chapter 13 Bankruptcy in Alabama
Repayment Plans
One of the main benefits of Chapter 13 bankruptcy is the ability to create a repayment plan that allows you to catch up on missed payments over a period of three to five years. This can include mortgage payments, car payments, and other debts. Your repayment plan will be based on your income and expenses, and it must be approved by the bankruptcy court.
Protection from Creditors
When you file for Chapter 13 bankruptcy, an automatic stay goes into law and effect that stops most collection actions by creditors. This means that creditors cannot continue to call you, send you letters, or take legal action to collect your debts while your bankruptcy case is pending.
Debt Discharge
Once you have completed your repayment plan and met all other requirements, you may be eligible for a discharge of eligible debts. This means that you will no longer be responsible for paying those debts, and creditors cannot take legal action to collect on them.
The Chapter 13 Bankruptcy Process in Alabama
Filing the Petition
To begin the Chapter 13 bankruptcy process, you must file a petition with the bankruptcy court in Alabama. This includes providing information about your debts, income, expenses, assets, and other financial information.
Meeting of Creditors
After you file your petition, you and bankruptcy attorneys will attend a meeting of creditors where you will be asked questions by the bankruptcy trustee and any creditors who choose to attend. This meeting typically takes place within a few weeks after you file your petition.
Confirmation Hearing
Once your repayment plan is created, you will attend a due plan confirmation hearing where the bankruptcy court will review and approve your plan. This hearing typically takes place within a few months after you file your petition.
Completion of the Payment Plan
After your repayment plan is approved, you will make monthly payments to the your bankruptcy lawyer and trustee for the duration of the plan. These payments will be used to pay off your debts according to the plan.
Debt Discharge
Once you have completed your repayment plan and met all other requirements, you may be eligible for a discharge of eligible debts. This means that you will no longer be responsible for paying those debts, and creditors cannot take legal action to collect on them.
Alternatives to Chapter 13 Bankruptcy in Alabama
Debt Consolidation
Debt consolidation involves combining multiple debts into one loan with a lower interest rate and monthly payment. This can help you pay off your debts more quickly and avoid bankruptcy.
Debt Settlement
Debt settlement involves negotiating with creditors to pay off your debts for less than what you owe. This can be a good option if you have significant debts and cannot afford to make your monthly payments.
Credit Counseling
Credit counseling involves working with a credit counselor to create a budget and develop a plan to pay off your debts. This can be a good option if you need help with tax debt and managing your finances but do not want to file for bankruptcy.
Conclusion
Chapter 13 bankruptcy can be a good option for individuals with regular income who want to reorganize their debts and create a repayment plan. In Alabama, there are eligibility requirements and debt limits that must be met to file bankruptcy there, and the process can take several months to complete.
If you are considering Chapter 13 bankruptcy in Alabama, it is important to understand the benefits, process, and alternatives. Working with an experienced bankruptcy attorney can help you make informed decisions and navigate the complex bankruptcy process.
If you are struggling with debt and considering bankruptcy, contact a bankruptcy attorney to discuss your options. A bankruptcy attorney can provide guidance and help you determine the best course of action for your situation.
Frequently Asked Questions
What is Chapter 13 bankruptcy?
Chapter 13 bankruptcy is a type of bankruptcy that allows individuals with regular income to have bankruptcy courts reorganize their debts and repay them over a period of three to five years.
Who is eligible for Chapter 13 bankruptcy?
Individuals with regular income and debts within certain limits are eligible for Chapter 13 bankruptcy.
How does Chapter 13 bankruptcy differ from Chapter 7 bankruptcy?
Chapter 13 bankruptcy involves a repayment plan other secured debts, while Chapter 7 bankruptcy involves liquidating assets to pay off debts.
What types of debts can be included in a Chapter 13 bankruptcy repayment plan?
Most types of debts can be included in a Chapter 13 bankruptcy repayment plan, including credit card debt, medical bills, and personal loans.
How long does a Chapter 13 bankruptcy repayment plan last?
A Chapter 13 bankruptcy repayment plan typically lasts three to five years.
What happens if I can’t make my Chapter 13 bankruptcy payments?
If you can’t make your Chapter 13 bankruptcy payments, you may be able to modify your plan or convert to a Chapter 7 bankruptcy.
Will I lose my property if I file for Chapter 13 bankruptcy?
No, you will not lose your property if you file for Chapter 13 bankruptcy. You will be able to keep your property as long as you make your payments under the repayment plan.
Can I file for Chapter 13 bankruptcy if I have already filed for bankruptcy in the past?
Yes, you can file for Chapter 13 bankruptcy if you have already filed for bankruptcy in the past, under bankruptcy law but there may be certain restrictions on when you can file.
How will filing for Chapter 13 bankruptcy affect my credit?
Filing for Chapter 13 bankruptcy will have a negative impact on your credit, but it may be less severe than filing for Chapter 7 bankruptcy.
How can I find a Chapter 13 bankruptcy attorney in Alabama?
You can find a Chapter 13 bankruptcy attorney in Alabama by searching online, asking for referrals, or contacting the front office of the Alabama State Bar Association.
Glossary
- Chapter 13 Bankruptcy: A type of bankruptcy that allows individuals to reorganize their debts and create a repayment plan over a period of 3-5 years.
- Debtor: The person who owes money to creditors.
- Creditor: The person or entity to whom money is owed.
- Repayment Plan: A schedule for paying off debts over a specific period of time.
- Discharge: The legal release of a debtor from the obligation to pay certain debts.
- Trustee: A court-appointed individual who manages the bankruptcy case and oversees the repayment plan.
- Priority Debts: Debts that must be paid first in a Chapter 13 bankruptcy, such as taxes and child support.
- Secured Debts: Debts that are backed by collateral, such as a mortgage or car loan.
- Unsecured Debts: Debts that are not backed by collateral, such as credit card debt or medical bills.
- Exemptions: Property or assets that are protected from creditors during bankruptcy proceedings.
- Means Test: A calculation used to determine whether an individual is eligible for Chapter 13 bankruptcy.
- Disposable Income: The income that remains after paying necessary expenses and debts.
- Automatic Stay: A court order that stops creditors from taking collection actions against the debtor.
- Confirmation Hearing: A court hearing where the repayment plan is reviewed and approved by the trustee and judge.
- Conversion: The process of changing a Chapter 13 bankruptcy to a Chapter 7 bankruptcy.
- Reaffirmation Agreement: An agreement to continue paying a debt even after bankruptcy proceedings have ended.
- Bankruptcy Dismissal: The termination of a bankruptcy case without a discharge of debts.
- Bankruptcy Estate: All property and assets that are subject to distribution to creditors in a bankruptcy case.
- Adversary Proceeding: A lawsuit within a bankruptcy case, typically involving a dispute between the debtor and the creditor.
- Dismissal Without Prejudice: A dismissal of a bankruptcy case that allows the debtor to refile at a later date.
