Bankruptcy Attorney in Pelham

Choosing Between Chapter 7 & Chapter 13 Bankruptcy

These consumer bankruptcy chapters address debt in different ways, and eligibility depends on the facts of your case. I examine income, secured debts, missed payments, property, and other considerations before discussing whether filing may be appropriate. No particular chapter or case result can be promised in advance.

Chapter 7 Eligibility

Individual debtors considering liquidation bankruptcy generally complete a means test, which compares household income with the Alabama median income for a similarly sized household. The calculation is an important part of eligibility screening. Bankruptcy exemptions and other legal or financial circumstances may also affect whether this option is appropriate.

Chapter 13 Repayment Plans

This chapter uses a court-supervised repayment plan that generally lasts three to five years. Debtors below the applicable state median income commonly propose a three-year plan unless the court approves a longer period for cause. Above-median debtors generally use a five-year plan.

For a homeowner behind on mortgage payments, filing may pause foreclosure while overdue payments are addressed through the plan. Whether that approach is available or workable depends on filing timing, income, ongoing mortgage obligations, and the proposed terms. Filing doesn’t guarantee that a foreclosure issue or other debt problem will be resolved in a particular way.

The Bankruptcy Filing Process for Pelham Residents

Bankruptcy cases arising in Pelham, Alabama are assigned to the Southern Division of the U.S. Bankruptcy Court for the Northern District of Alabama. This federal jurisdiction determines where the case is administered. Required steps and timing vary with the type of filing and the debtor’s circumstances.

Filing a liquidation petition triggers the automatic stay, a court protection that pauses many collection actions while the case is pending. A trustee later conducts the 341 meeting of creditors, where the debtor answers questions about the filed financial information. The location or format of that required meeting is set through the applicable court process.