CHAPTER 7 BANKRUPTCY DEBT RELIEF

Chapter 7 bankruptcy is often known as "liquidation bankruptcy" because it involves the selling of the debtor's non-exempt property by a trustee to repay creditors. It is governed by Chapter 7 of the United States Bankruptcy Code, which provides a legal path for individuals and businesses that are unable to meet their financial obligations. This chapter is a common choice for debtors because it offers the chance to make a fresh start, although it has significant consequences, including a severe impact on the debtor's credit rating.

The Legal Framework for Chapter 7 Bankruptcy

The Bankruptcy Code, specifically Title 11 of the United States Code, governs all bankruptcy proceedings in the United States, including Chapter 7. Key provisions include the automatic stay (section 362), which halts all collection actions against the debtor, and the discharge of debts (section 727), which releases the debtor from personal liability for certain specified types of debts. Notably, some debts, such as child support, most tax debts, and student loans, are not dischargeable.

Chapter 7 bankruptcy is available to individuals, partnerships, corporations, and other business entities. However, before an individual debtor can file for Chapter 7, they must satisfy the means test established under the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The means test is intended to prevent abuse of the bankruptcy system by those with sufficient income to repay their debts.

Provisions Under Chapter 7 Bankruptcy

Chapter 7 provides a way to wipe out unsecured debts, which are debts without collateral, such as credit card bills, medical expenses, and personal loans. However, some types of unsecured debt are non-dischargeable, including alimony, child support, certain taxes, and student loan debts (unless the debtor can show undue hardship).

Secured debts, where the debtor has pledged certain property as collateral for the debt, are handled differently. In general, the debtor has the option to return the property, pay the creditor an amount equal to the replacement value of the property, or "reaffirm" the debt, that is, agree to new contract terms and continue making payments.

Importantly, not all of a debtor's property is sold in a Chapter 7 bankruptcy. Certain "exempt" property is allowed to be kept by the debtor, often including some equity in the debtor's home, a modest vehicle, necessary clothing, household items, tools for the debtor's trade, and retirement accounts. The specific exemptions vary from state to state.

Steps Involved in Filing for Chapter 7 Bankruptcy

The process of filing for Chapter 7 bankruptcy typically includes the following steps:

1. Pre-bankruptcy Credit Counseling: Within 180 days before filing for bankruptcy, the individual must complete a credit counseling course from an approved agency.
2. Filing the Bankruptcy Petition: The bankruptcy case officially starts when the debtor (or the debtor's attorney) files a petition with the bankruptcy court. The petition includes information about the debtor's assets, debts, income, and a summary of their financial history.
3. Automatic Stay: Upon filing the petition, an automatic stay goes into effect, which prohibits most creditors from collecting debts.
4. Meeting of Creditors: A court-appointed trustee will hold a meeting of creditors (also called the 341 meeting), where the debtor is questioned under oath about their financial affairs.
5. Trustee's Review and Liquidation: The trustee reviews the case to see if there are assets that are not exempt and therefore can be sold to repay creditors. If such assets exist, the trustee takes control, sells them, and pays the creditors.
6. Financial Management Course: Before debts can be discharged, the individual debtor must complete a financial management course.
7. Debt Discharge: If the court finds no issues, it will typically grant a discharge of eligible debts 60 to 90 days after the Meeting of Creditors.

Chapter 7 bankruptcy provides a pathway for overwhelmed debtors to seek relief and make a fresh start. However, the decision to file for bankruptcy is a serious one, as it impacts the debtor's credit and may require the liquidation of the debtor's assets. It is important for individuals considering this path to consult with a knowledgeable bankruptcy attorney and carefully consider all the potential advantages and disadvantages.

Snable Stevenson & Silva Can Help You to Recover

Snable Stevenson & Silva's legal team is well-versed in the intricacies of bankruptcy law, with a particular emphasis on Chapter 7 bankruptcy. We pride ourselves on our dedication to client success and the ability to provide robust, personalized representation in this complex area of law.

Tailored Strategies

Our approach begins with understanding the unique circumstances of each client. Filing for bankruptcy is a significant decision that affects your finances, lifestyle, and future credit. At Snable Stevenson & Silva, we understand that each case has its unique intricacies, so we take the time to analyze your situation thoroughly and provide customized advice that best aligns with your financial needs and objectives.

Understanding the Bankruptcy Process

Chapter 7 bankruptcy, also known as "liquidation bankruptcy," involves the sale of a debtor's non-exempt assets to repay creditors. The process can be daunting and complicated for those unfamiliar with the law. Our legal team is adept at navigating these complex laws and procedures. We break down the process into manageable steps, ensuring you understand what's happening at each stage, from credit counseling and filing the bankruptcy petition, to attending the creditors' meeting and achieving the discharge of debts.

Protecting Your Financial Interests

As your legal representatives, our primary role is to protect your interests. One key aspect of Chapter 7 bankruptcy is the concept of exemptions — specific types of property that the bankruptcy law protects from sale. We thoroughly understand both federal and state exemption laws, and we employ this knowledge strategically to protect your assets. Our meticulous planning ensures that you retain as much property as possible, making your financial recovery after bankruptcy smoother.

Negotiating with Creditors

At Snable Stevenson & Silva, our attorneys are skilled negotiators who are well-prepared to represent your interests before creditors. During the 341 meeting (the meeting of creditors), we provide effective and assertive representation, ensuring your rights are protected. We also help navigate any disputes that arise regarding your assets or debt discharge, using our wealth of legal knowledge to your advantage.

Proven Track Record in Bankruptcy and Consumer Advocacy

Our reputation is built upon a solid track record of successful bankruptcy cases. We have guided countless clients through the Chapter 7 bankruptcy process, ensuring they achieve the financial relief they need while retaining the maximum possible assets. Our attorneys' expertise and dedication have been recognized for years by clients and peers alike.

Snable Stevenson & Silva offers effective, personalized representation for Chapter 7 bankruptcy cases. Our legal team's knowledge, experience, and dedication, combined with our track record of success, make us an ideal choice for individuals seeking relief from overwhelming debt. By choosing us, you're not just gaining legal representation; you're gaining a team dedicated to helping you achieve a fresh start.

Contact our Birmingham, Alabama Bankruptcy Lawyers Today for Legal Help

Are you or your family overwhelmed with debt? Contact Snable Stevenson & Silva for immediate legal assistance and advice. You might be eligible for one or more bankruptcy options, or possibly for other forms of debt relief. Our qualified Alabama bankruptcy lawyers can help you determine the best course of legal action and help to get you on a path to financial recovery.

We offer a free case evaluation and consultation. Contact our bankruptcy law office in Birmingham, Alabama to schedule yours today. There’s often a limited amount of time to act, so give us a call to get started today.