Alabama Bankruptcy and Debt Relief Questions

Since calls to my office about bankruptcy have been increasing, I’ve decided to share some bankruptcy FAQs with you.  These are short answers to complicated questions.  If you are considering filing bankruptcy, it is important that you hire an experienced attorney.


1.      What is the difference between Chapter 7, Chapter 11 and Chapter 13 bankruptcy?

Chapter 11 bankruptcy applies to businesses. Chapter 7 and 13 apply to an individual(s).  Chapter 13 is like debt consolidation where you pay your debts over a 3 to 5 year plan.  Chapter 7 eliminates your debts.  There are certain guidelines set by the Court that determine if you qualify to file Chapter 7.


2.      If I file bankruptcy, will my name be in the newspaper? 

Yes, the newspaper will publish your name and address.  It is a public record although I haven’t seen the list in the paper in some time.


3.      What should I do if the bank is about to foreclose on my house?

If you are behind on your payments: (1) negotiate a loan modification agreement with your mortgage company; (2) refinance; or (3) file Chapter 13 bankruptcy.  Once the foreclosure sale is held, bankruptcy cannot save your home.


4.      Can I keep my four-wheeler and boat if I file bankruptcy?

It depends upon how much you owe on them, what type of bankruptcy you file, and how much (if any) of your total debt you will be re-paying.  The general rule is that the court will not allow you to keep what it considers a recreational item that is financed unless you are paying all of your other debt back 100%.


5.      Can I keep a credit card to use for emergencies only?  

If you have a zero balance at the time you file, the card does not have to be listed in your bankruptcy.  However, credit card companies seldom allow you to continue using your card.


6.      How long will a bankruptcy stay on my credit?

Seven (7) to ten (10) years depending upon the type that you file.


7.      Will I be able to buy a house or car after I file bankruptcy? 

Yes, but you will probably pay a higher interest rate until you re-establish your credit.  It will depend upon your income and credit history at the time.


8.      My dad co-signed for my car.  If I file bankruptcy will it hurt his credit?

Your dad’s credit history will indicate that the debt is being paid through a “wage earner’s plan” but in most cases it shouldn’t affect his credit.

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