Exploring the Possibility of Filing a Chapter 13 Bankruptcy With an Attorney in Bessemer, AL

No one sets out to create debt that they cannot honor. When circumstances like short time at work or medical issues make it impossible to pay those debts, one possible solution is to take with an attorney in Bessemer, AL about filing a chapter 13 bankruptcy action. Here are some of the reasons why this approach could be just what the client needs.

Understanding the Basics

As an attorney in Bessemer, AL will explain, a chapter 13 bankruptcy does not discharge the debt in a matter of months. Instead, the debtor is placed under the protection of the court and pays into a plan for a period of three to five years. During that time, the court disburses funds to each of the creditors included in the bankruptcy action. Depending on the financial situation of the client, every creditor may receive full compensation. In some cases, certain creditors will be paid in full while others receive only a part or even nothing that is owed.

Who Qualifies for This Type of Bankruptcy?

As with a chapter 7 bankruptcy, the debtor must meet the qualifications set forth by the court. This will mean passing what is known as a means test. Essentially, if the court determines that the individual does have enough assets and income to cover the outstanding debts, the petition will not be approved. For debtors who make under a certain amount each year, there will be no problem being approved for the action.

Why a Chapter 13 and Not a Chapter 7?

Some people wonder why filing a chapter 13 instead of a chapter 7 is the right choice. For some debtors, they do not meet the most stringent requirements for the latter type of bankruptcy. Others may have what is known as priority debts. These are debts that cannot be discharged in a chapter 7 but they can be settled in whole as part of a chapter 13. For people who owe back taxes, back child support or have outstanding student loans, a chapter 13 is often the best way to make arrangements to eventually settle priority debts and either pay off or have dismissed any unsecured debt.

For anyone in dire financial circumstances, call Forstman & Cutchen LLP and arrange for a consultation. After looking at the particulars, it will be easy to determine what sort of action would be in the best interests of the client.