In general, there are two ways you can declare bankruptcy in Alabama: through debt liquidation (commonly called Chapter 7) or through reorganization of debt (also known as Chapter 13). Under Chapter 7 bankruptcy, qualifying individuals can have most of their remaining debt discharged once they have liquidated their nonexempt assets (including possibly their home and their car) to satisfy creditors under the terms of the bankruptcy filing. Or, to put it another way, the bankruptcy court will decide which of your possessions you are required to sell, and after you do so, the money earned is put toward the debt you owe. Any remaining debt except for that portion which is non-dischargeable (see below), is then wiped out.
Qualifying for Chapter 7
In order to qualify for Chapter 7 liquidation bankruptcy you will have to prove that your income is not sufficient to allow reorganization of debt under Chapter 13. A skilled Alabama Chapter 7 bankruptcy attorney can assist you in determining whether or not you may qualify for liquidation. At Sadberry Law Offices, LLC, I can help you figure out which of your assets my be required to sell. If you are current on your mortgage and vehicle payments, you may be permitted to retain possession of your property.
Under Alabama Chapter 7 bankruptcy law, non-dischargeable debts include:
- Debt owed for student loans
- Money owed for court-ordered child support or alimony
- Debts related to personal injury cases or wrongful death cases when drunk driving was a factor
- Any fees or fines related to violations of Alabama or federal law, including payments for criminal restitution or traffic tickets
- Debt owed for federal or state income taxes from the last three years
- Any other tax debt
- Any debts you neglected to include when filing for bankruptcy
The bankruptcy court can declare other debts to be non-dischargeable if the judge concerned assents to creditors’ requests to do so. Your Alabama liquidation bankruptcy attorney can help you determine if your other debts are likely to qualify for dischargeability. Additionally, a liquidation bankruptcy lawyer is instrumental in helping you file the necessary reaffirmation agreements that allow you to retain ownership of your home or vehicle when you are filing for Chapter 7.