Call Us At : 205-982-3325
Call Us At : 205-982-3325
A lawyer from Gina H. McDonald & Associates, LLC, can look at your financial situation and explain whether Chapter 7 makes sense for you. We can walk you through the entire legal process, help you protect your property, and answer all your questions along the way.
Contact us today to arrange your free consultation and learn how we can help you move forward.
Chapter 7 bankruptcy is a legal process that allows people to erase certain debts when they can’t afford to repay them. It allows you to eliminate these debts so you can start fresh.
When you file for bankruptcy under Chapter 7, the court puts a stop to collection calls, wage garnishments, and lawsuits. This pause gives you some space while the case moves forward.
In a Chapter 7 case, the court may require you to sell some of your property to pay creditors. However, most people who file don’t lose everything. The law also allows you to keep certain assets, like part of your home’s value, personal items, and tools you need for work.
Once the court closes your Chapter 7 case, many of your debts get discharged, which means they go away for good. You don’t have to repay debts once the court discharges them. The full Chapter 7 process usually takes about four to six months.
Chapter 7 doesn’t fix everything, but it can help you take back control of your finances. If you feel overwhelmed by debt, this option could give you the clean slate you need to move forward.
You must pass a means test to qualify for Chapter 7 bankruptcy. This test compares your income to the median income for a household of your size in Alabama. If you earn less than the limit, you likely qualify. If you earn more, you could still qualify, but you’ll need to complete more steps.
You also must show that you haven’t filed another bankruptcy too recently. Additionally, most people need to complete credit counseling sessions before filing.
Chapter 7 works best for people with high unsecured debts and low income or limited assets. Unsecured debts are those that aren’t “secured” by physical items like cars that your lender could repossess for nonpayment. Examples of unsecured debts include credit card debts, payday loans, and medical bills. Chapter 7 bankruptcy doesn’t help as much with secured debts, like car loans or mortgages, unless you are willing to give up your property.
Alabama law gives you the right to keep certain property when you file for Chapter 7 bankruptcy using legal protections called exemptions. These exemptions cover things you use every day, like your home, your car, your clothes, and your household items.
The Alabama homestead exemption lets you protect a portion of the value in your primary residence. You can also exempt personal property like furniture, appliances, and clothes up to a set dollar limit. The law also includes protections for retirement accounts and certain types of benefits.
Bankruptcy exemptions apply to your income, too. Per state law, you can exempt 75 percent of your gross wages, which is the amount you take home after taxes and legally required deductions.
If an asset falls within the exemption limits, you keep it. In many cases, people don’t lose anything because their assets either qualify for exemptions or don’t have much resale value.
Deciding to file Chapter 7 bankruptcy is a significant step, but the process looks largely the same for most people once they get the ball rolling. Here’s an overview of that process:
Chapter 7 bankruptcy can give you fast relief from debt. Once you file, the court blocks most collection actions. That means creditors must stop calling, mailing letters, suing you, or garnishing your paycheck.
If the court approves your case, it will erase many of your unsecured debts. These include credit card balances, personal loans, old utility bills, and medical debts. You won’t have to repay those after discharge. Most people receive a discharge within four to six months of filing for Chapter 7.
You also get a chance to reset your finances. Chapter 7 gives you space to focus on rent, food, transportation, and other basics instead of falling behind month after month. For many, that peace of mind makes a real difference.
Unlike Chapter 13, Chapter 7 doesn’t require a payment plan. You don’t have to send monthly checks to the court or trustee. That makes the process shorter and less expensive in most cases.
If you’re ready to take the first step toward a brighter financial future, contact Gina H. McDonald & Associates, LLC, for your free case review. Our team knows how to handle Chapter 7 cases in Alabama and can guide you through the process from start to finish.
