Bankruptcy is a life-saver for those who are drowning in debt. Talk to one of the Bankruptcy Lawyers in Tallassee AL to find out how filing can help you. All filers must have mandatory credit counseling and select the bankruptcy chapter they will file.
Chapter 7 is for those who do not have a regular source of income. Further, the lack of income means they cannot repay creditors. Much of the debt is discharged if the debtor passes the means test. Filers have to prove they are economically unable to make the monthly payment required in a Chapter 13.
The bankruptcy trustee liquidates much of the filer’s assets to repay debt. However, some property is exempt from liquidation including a certain amount of equity in one’s home. Child support and alimony payments are exempt as well as social security benefits. In addition, pension benefits are exempt as well as workers compensation payments.
Chapter 13 filers must have a regular source of income. The income is used to make a monthly bankruptcy payment to the court. Bankruptcy Lawyers in Tallassee AL work with the bankruptcy trustee to work out a payment plan. However, they must first make a list of what debts are paid through the court. Usually, arrears on secured debts like mortgages and car notes are included. Likewise, federal and state income taxes can be paid through the bankruptcy.
How much will the debtor pay? The court works with the attorney to come up with a fair monthly figure. The amount is usually based on the debtor’s assets and income. Unfortunately, the payment tends to be a large part of the filer’s disposable income. Therefore, filers must be on a strict budget during the course of the bankruptcy. Remember, current monthly payments must be paid outright and not through the courts.
The court issues an automatic stay when a bankruptcy is filed. This means collection activities have to stop. For example, companies must cease mortgage foreclosure proceedings and car repossession activity. Further, creditors must stop calling and sending letters.
The bankruptcy stays on the credit report for several years.. However, many lenders prefer seeing a bankruptcy rather than months of late or no payments. For more information, visit Courtney & Mann LLP.