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Alabama Bankruptcy Lawyer

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Financial recovery can be nearly impossible for those with insurmountable debts. However, the bankruptcy process makes financial freedom possible. Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by the debtor.

Individuals and organizations unable to pay their creditors have the option to use bankruptcy to settle their debts. Creditors may also file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed. This is known as involuntary bankruptcy.

The primary purpose of bankruptcy is to relieve a debtor of most debts, and repay creditors in an orderly manner to the extent that the debtor has the means to do so. Bankruptcy allows debtors to be discharged from the legal obligation to pay most debts.

A bankruptcy case is initiated by the filing of a petition that contains the debtor's financial information. Bankruptcy cases are always filed in United States Bankruptcy Court (an adjunct to the U.S. District Courts). However, these cases are often highly dependent upon state law, particularly with respect to the validity of claims and exemptions.

There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code:

Chapter 7: Basic liquidation for individuals and businesses;
Chapter 9: Municipal bankruptcy;
Chapter 11: Rehabilitation or reorganization, used primarily by business debtors, but sometimes by individuals with substantial debts and assets;
Chapter 12: Rehabilitation for family farmers and fishermen;
Chapter 13: Rehabilitation with a payment plan for individuals with a regular source of income;
Chapter 15: Ancillary and other international cases.

The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. In Chapter 7, a debtor surrenders his or her non-exempt property to a bankruptcy trustee, who then liquidates the property and distributes the proceeds to the debtor's unsecured creditors. In exchange, the debtor is generally entitled to a discharge of debt, except when there is evidence of concealment or fraud. In Chapter 13, the debtor retains ownership and possession of all of his or her assets, but must devote some portion of his or her future income to repaying creditors, generally over a period of three to five years. The debtor is protected from most lawsuits, wage garnishments, or attempts to compel payment during the bankruptcy proceeding.

Lawyers who specialize in bankruptcy law practice have not only extensive education in the relevant bankruptcy and financial laws, but also the experience of handling cases that are similar to yours. They will be able to explain your options to you, guide your choices, and represent you in bankruptcy court.

Federal bankruptcy laws were amended in 2005 to require a means test calculation to determine if a person can file Chapter 7 bankruptcy. If household income exceeds the state median income for a family of four, which, in Alabama, is $55,424, a person can still file Chapter 7. Alabama allows a $5,000 homestead exemption and a $3,000 personal property exemption. If a husband and wife jointly own the homestead, each may separately claim the homestead exemption.

Bankruptcy is a complicated legal matter, and the use of an attorney is highly recommended. There are an estimated 255 bankruptcy attorneys in Alabama who can be found through the Alabama Bar Association website at http://www.alabar.org.