When you declare Chapter 7 bankruptcy, you don’t need to file a plan to repay your debt. With this type of bankruptcy, you will be assigned a trustee and that trustee will sell your assets that are not exempt and use the money to pay your creditors.
Under the U.S. Bankruptcy Code, you will be exempt from having to sell certain assets, but once you file for Chapter 7 bankruptcy, the result may be that you lose some of your property.
Exactly what is Chapter 7 bankruptcy used for?
People and businesses can use Chapter 7 bankruptcy. Individuals use it to relieve themselves of debt. Businesses use it to liquidate their assets and terminate their business. One of the main reasons why people choose Chapter 7 is to make certain debts go away so that they can have a new beginning.
If the debtor has a monthly income that is higher than the state median, the Bankruptcy Code makes it mandatory that the debtor goes through a means test to determine whether the debtor is abusing the privilege of Chapter 7 bankruptcy. If the debtor can prove that their circumstances justify the expenses or adjustments that they have had to make, the decision may go in their favor.
The individual debtor in Alabama is required to file a Certificate of Credit Counseling as well as a copy of their debt repayment plan that they have developed through credit counseling as well as a financial management course before they file for bankruptcy.
Getting support if you must file for bankruptcy
If you are at the point where you must file for Chapter 7 bankruptcy, there is no doubt that you didn’t come to the decision lightly. In fact, there is a good possibility that you did everything to try and avoid bankruptcy before you concluded that there was no other way. However, you should try to view bankruptcy as a positive move and a new beginning.
This is where the solid support of a bankruptcy lawyer can really be beneficial to you. The lawyer can educate you about the federal and Alabama state laws so that you get the most benefit from what you must do. After you have completed the process, hopefully, you will be able to start fresh and look forward to a brighter future.