If even the smallest of debts can cause you sleepless nights, then imagine being in a situation where all your bills are piling up, you’re being tormented multiple times a day by debtors and your landlord is threatening to evict you? If this is your current situation in Birmingham, then all hope is not lost because filing bankruptcy can help give you a fresh start. But with all the bad press that bankruptcy receives is it really a good idea? What does bankruptcy mean in the first place? If these are your thoughts whenever someone mentions the word, then you are in good company because we are about to address all your concerns below.
What are bankruptcy laws?
Bankruptcy laws are laws that were set as early as the year 1800 with the sole aim of helping individuals or businesses solve or repay their debts. To put it simply, bankruptcy laws are laws that were put in place to excuse or liberate individuals or businesses that are unable to meet their financial obligations or pay their debts through a much legal process. There are several chapters of bankruptcy but below are the main ones
Chapter 7 bankruptcy
Also known as a liquidation or straight bankruptcy, debtors usually surrender all their properties and assets which are then sold, and all proceeds distributed to creditors, thus liberating them from their debts permanently. In other words, if you file a chapter 7 bankruptcy, you’re are basically selling off your properties to clear your debts. Chapter 7 bankruptcies are usually common among individuals or businesses with less or no assets and are mostly applicable in debts and bills which lack collateral backing, also known as unsecured debts.
Chapter 11 bankruptcy
This type of bankruptcy is usually filed by businesses under debts. It is similar to Chapter 13 only that in this case, it is for businesses. It allows an entity to continue with its normal operations without any interruption as it works on a debt repayment plan under the supervision of the court.
Chapter 13 bankruptcy
This type of bankruptcy allows you to keep all of your assets in the condition that you pay back your debts over a specified period of time, mostly three to five years. It is often referred to as a reorganization and is the most powerful as it immediately puts a red sign to your assets meaning that creditors can no longer take them. For instance, filing for this type of bankruptcy allows you to stop a property foreclosure, car repossessions, IRS tax liens or any other actions that creditors might be taking against you.
Why it is important to seek legal help
While it is possible for you to file a bankruptcy petition on your own, hiring an attorney could prove to be incredibly beneficial in the long run. Even though doing it on your own seems cheaper, when you contact a bankruptcy law firm Birmingham AL to help you with your case, it makes things easier for you because first, you get access to a pool of proficient attorneys who have handled cases similar to yours before, and thus boast the experience to correctly manage your situation.
Also keep in mind that bankruptcy might not be the only option and even though you may not know this, an attorney does and will evaluate your situation to see whether you have a better option. If you don’t hire one, then you will never know.
Lastly but not least, contacting a bankruptcy law firm makes the process less hectic, as its attorneys will help you with the paperwork, brief you on what to expect and help you determine which chapter of bankruptcy suits your situation better.