The Advantages of Filing Chapter 7 in Alabama over Chapter 13 

Filing personal bankruptcy is the only way to eliminate debts when compared to the alternatives. The alternatives include struggling to pay creditors money owed to them or try to find a high interest rate consolidation loan. Both options will take a long time and require years of work. Many people decide to file personal bankruptcy and can file chapter 7. Before filing bankruptcy, it’s important to understand a chapter 7 bankruptcy law birmingham al and the chapter’s advantages. 

Chapter 7 Eliminates Debts and Chapter 13 Doesn’t 

One major advantage of Chapter 7 is that unsecured debts are eliminated. Unsecured debts are credit that was exchanged based on a promise to pay. For example, department store cards, credit cards and personal loans are types of unsecured debts that are included in a Chapter 7 bankruptcy petition. These debts are eliminated. This means that after bankruptcy is granted, the person won’t pay creditors debts they owe. The individual has a clean financial slate. 

Chapter 7 Requires No Payments to Creditors 

Chapter 7 does not require making payments to the court like Chapter 13. Chapter 13 requires making monthly payments to the bankruptcy court. The court divides the money among the creditors. The individual is still required to make their current monthly payments. At any time someone misses their court payment or current payment to creditors their case can be dismissed. Chapter 7 only requires a person to pay the filing bankruptcy filing fee, lawyer’s fee and credit counseling fee. 

Chapter 7 is Faster than Filing Chapter 13 Bankruptcy 

Chapter 7 has a faster bankruptcy process than Chapter 13. Debts are discharged, or eliminated, in about 90 to 120 days after the bankruptcy petition is filed. The means a person can focus on improving their credit score and getting financially back on track. Chapter 13 typically takes about three to five years to complete. Thus, a person will continue to go through the bankruptcy process for at least three years. 

Obtain Credit Faster after Bankruptcy 

Once the Chapter 7 process is completed, a person is eligible for certain types of loans to help them rebuild their credit. The loans may have a high interest rate. However, the person may be able to increase their credit score faster than someone who completes Chapter 13 bankruptcy. A person’s credit score may increase based on several factors including the amount of credit they have and making timely payments. Usually, a person will see an increase in their credit score almost immediately after the bankruptcy process is completed. 

Contact a Birmingham Alabama Attorney about Filing Chapter 7 

It’s important to know whether an individual can file for Chapter 7 bankruptcy or not. This means contacting a bankruptcy attorney in Birmingham. Determining whether an individual can file Chapter 7 depends on a variety of factors, including a Means Test. A Means Test is not an actual test. Instead, it is required by bankruptcy law to determine if a person has enough disposable income to file Chapter 13.

 

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