If you are overwhelmed by the amount of debt that you have, a Chapter 7 bankruptcy might be the solution for you. A Chapter 7 wipes out unsecured debt (like credit cards, medical bills, debts from previously repossessed items, and judgments on lawsuits).
People are often concerned that if they file for Chapter 7, they will lose everything. This is not necessarily the case. Many times people are able to keep houses and cars by reaching agreements with the creditors of the items. (There can be problems if you have too much equity in an item like a house. This issue is best dealt with on a case to case basis. We will discuss it with you in detail when you come in for a free consultation).
The law provides for certain "exemptions" which allow you to keep personal property items as long as they fall within certain guidelines.
Effect on Credit
Filing a Chapter 7 will have an effect on your credit score. Usually there is a negative impact at first. However, your credit is not damaged forever. After the conclusion of the Chapter 7, you can rebuild your credit fairly quickly. Many clients can recover and have a good credit score within a year and a half of exiting their bankruptcy case.
Filing a Chapter 7 will stop harassing phone calls, garnishments, and lawsuits. Filing will erase your debt and allow you to get a fresh start.
A Chapter 7 case usually lasts about 4 months from the time you file until the time you get your discharge papers which signify that the case is over. (Your creditors have to stop bothering you when you file. You do not have to wait until the end of the case to get relief).
In order to qualify for a Chapter 7 bankruptcy, you have to pass a means test. In this, your income is compared to what others in Alabama make. If you are under that median amount, you automatically qualify for a Chapter 7. If you are over the median amount, we can go back in and make more deductions to see if you still qualify.