I am an experienced Daphne bankruptcy attorney serving Baldwin County and the surrounding areas.
Filing for bankruptcy protection can be a valuable tool in dealing with a variety of financial situations. Are you facing foreclosure? Garnishment? Repossession? Job loss? Have you been sued by a credit card company or medical provider? I offer a FREE, NO-OBLIGATION, CONFIDENTIAL CONSULTATION to determine whether bankruptcy may be an option for you.
The goal of the bankruptcy laws is to give the “honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” Local Loan v. Hunt, 292 U.S. 234, 244 (1934).
Under the bankruptcy code, many of your debts may be dischargeable, releasing you from personal liability for the debts and stopping creditors from collecting the debts. While not all debts are dischargeable, we may have the option to restructure some debts to lower your monthly payments while saving your house and/or vehicles.
Each case is unique and should be analyzed by an experienced bankruptcy attorney. I am an experienced Daphne Bankruptcy attorney and will analyze your unique situation and see whether bankruptcy may be an option.
Contact an experienced Daphne bankruptcy attorney for a free phone consultation today.
What is Bankruptcy?
Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
How does filing for bankruptcy help?
Bankruptcy may make it possible for you to:
- Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.
- Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
- Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
- Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
- Restore or prevent termination of utility service.
Can bankruptcy eliminate a car loan or a mortgage?
In bankruptcy, it is usually not possible to eliminate certain rights of “secured” creditors. A “secured” creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages.
You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the collateral unless you continue to pay the debt.
Can I eliminate child support or alimony?
No. You cannot discharge alimony or child support.
Can I discharge obligations under a divorce decree?
Alimony and child support are not dischargeable but other obligations under a property settlement agreement or divorce decree may be dischargeable in a chapter 13 bankruptcy.
What happens to a co-signor on a debt in a bankruptcy?
When a relative or friend has co-signed a loan, the cosigner may still have to repay all or part of the loan. However, the co-signor may get the benefit of the co-debtor stay.
What is Chapter 7 Bankruptcy?
Chapter 7 is the liquidation provision of the bankruptcy code and is sometimes referred to as “straight bankruptcy.” Under chapter 7, the assets of the debtor are collected and sold and the proceeds are distributed to the creditors. The debtor is allowed to keep some property which is exempt under the Bankruptcy Code or the laws in the state in which the debtor resides. However, anything that is not exempt will be used to satisfy the claims of creditors. With this said, the substantial majority of cases are cases in which the debtor is able to exempt all of his or her assets under the code leaving creditors nothing. This is known as a “no asset” case. Once the debtor gives up all non-exempt property, the debtor is granted a discharge from most of the debts that are remaining.
What is Chapter 13 bankruptcy?
Chapter 13 is the reorganization provision of the bankruptcy code and is sometimes referred to as the “wage earner” provision. Chapter 13 allows debtors with a steady source of income to create a repayment plan by which creditors will be paid over an extended period of time. Generally, the plan will be such that creditors will be paid out over a three to five year period. In the plan, creditors do not necessarily have to be paid in full but they must receive as much as they would have received had the debtor filed under chapter 7 of the bankruptcy code. The plan is structured based on the income of the debtor net living expenses. The benefit of the chapter 13 bankruptcy is that the debtor is allowed to keep all of his or her property. Once the debtor has fulfilled the obligations under the plan, the debtor will be discharged from the debts that were not paid under the plan.
Will I lose all of my assets or property?
No. The Bankruptcy Code provides that a debtor filing for bankruptcy can keep certain assets for a “fresh start” by exempting property from the bankruptcy estate.
The vast majority of bankruptcy cases are “no asset” cases, in which the debtors have claimed an exemption in everything they own and there are no assets from which to pay creditors.
Do I have to list all of my debts?
Yes, you must list all of your debts on your bankruptcy schedules, even debts that are non-dischargeable or secured.
Will I lose my house if I file for Chapter 7 bankruptcy?
If there is no equity in the house, the trustee in a Chapter 7 will abandon the house to you meaning that you will be able to keep it, as long as you pay the mortgages. A bankruptcy does not relieve the property of the liability for voluntary liens, like mortgages or deeds of trust, nor for tax liens. So, the lender retains the right to foreclose if you don’t pay.
If there is equity in the house, it must be determined whether the equity is exempt. If the equity is exempt, you will be able to keep it, as long as you pay the mortgages. If the equity exceeds the exemptions allowed by the state, you should consider a chapter 13.
Does my spouse have to file bankruptcy with me?
No. Your spouse does not have to file with you.
A bankruptcy filing by one spouse does not bring the other spouse into the bankruptcy proceeding. However, if you and your spouse are jointly liable to a creditor, the bankruptcy of one spouse does not relieve the other of paying the debt. Upon a bankruptcy, the creditor may look to the other spouse for payment, unless the debt is a consumer debt to be paid 100% through a Chapter 13 plan, for which the co-debtor is protected by the co-debtor stay.
Will bankruptcy stop wage garnishments?
Yes. Once your case is filed, creditors are no longer entitled to garnish your wages for debts that existed at the beginning of the case. The only exception may be for on-going child or family support ordered by a court.
Are some debts non-dischargeable?
Yes. The scope of the discharge varies in each chapter: in Chapter 7, debts incurred by fraud, intentionally harmful actions, dishonesty, as well as priority taxes, unfiled taxes, family support and debts to a former spouse, student loans, criminal fines and restitution are non-dischargeable.
In Chapter 13 the discharge is broader, including non support debts to a former spouse, government fines, and some intentional torts that could not be discharged in Chapter 7.
How do I know which chapter of bankruptcy is best for me?
There are many factors that go into determining which chapter of bankruptcy is best including what kind of debts you have, whether you are behind on secured debts, and whether you have the regular income necessary for Chapter 13. In addition, there is also a set of caluclations known as the means test which may require some consumers to file Chapter 13 because their income exceeds the median income for a household of their size in their state.
It is best to speak with an attorney before making a determination as to which chapter best suits your needs.
Will I lose my retirement accounts if I file for bankruptcy?
No, most forms of retirement savings are unaffected by a bankruptcy filing, either because they are not property of the estate or because they may be claimed exempt from the claims of creditors.
How much does it cost to file for bankruptcy?
The attorney fee in a chapter 7 is usually between $1,000-$1,500. The filing fee is $335.
The attorney fee in a chapter 13 is usually between $2,500-$3,000. In most cases, this fee can be paid through the chapter 13 plan which allows the debtor to get started with just the filing fee up front. The filing fee is $310.
Please contact the office for a free phone consultation and quote.