Advantages of Filing Bankruptcy in Alabama

When filing for a bankruptcy in Alabama, there are two basic forms. Debtors can choose to file a Chapter 7 bankruptcy if they cannot handle their bills and need a way out. With a Chapter 13 bankruptcy, debt is restructured so the individual can pay it off over a period of five years.

The Benefits of Each Form of Bankruptcy

For the majority of people, a Chapter 7 bankruptcy is the best form. It is faster than a Chapter 13 and can be completed in a matter of months. Chapter 7 bankruptcies will effectively wipe away all of the person's debts. Once the debts are gone, the debtor can begin to rebuild their credit over the course of the next few years.

If the debtor wants to keep their assets, they can choose to do a Chapter 13 bankruptcy. With this option, the debtor gets to keep all of their property and goods. In exchange, the bankruptcy filer has to make payments over the next three to five years. Debt is restructured and a trustee is put in charge of making debt payments. The debtor just has to give a monthly amount to the trustee and the trustee will make payments to the various debts.

Most people will be better off with a Chapter 7. Unless the debtor has a temporary loss of income or short-term rise in expenses, they will find it difficult to make payments over a five year period.

Alabama Specific Rules

If the debtor chooses to file bankruptcy in Alabama, they will have a few specific exemptions and rules. Debtors are allowed to keep certain pieces of property provided they have enough equity built up and the loan payments are current. For real estate property, debtors can keep up to $5,000 of equity. The property cannot exceed 160 acres in size. If a husband and wife are filing for bankruptcy, the amount can double.

Bankruptcy claimants can receive annuity or disability proceeds of amounts less than $250 a month. Money that comes from life insurance policies can be kept if the beneficiary is the spouse or child of the debtor. Alabama state law also allows the debtor to keep any benefits from a mutual aid association.

Pensions and Public Aid

Within the state of Alabama, debtors are allowed to keep their pensions only if they are a public employee. Debtors must be former judges, teachers, state employees or law enforcement officers to retain their pension. In addition, the state of Alabama has ensured that blind, aged or disabled debtors can keep their public benefits. According to state law, any proceeds from unemployment compensation, worker's compensation or crime victim's compensations. Recipients of Southeast Asian War POW's benefits or coal miner's pneumoconiosis benefits are also allowed to keep any money given to them.

Personal Property Exemptions

When filing for a bankruptcy, the state law of Alabama allows debtors to keep certain items of personal property. Debtors are allowed to keep any of their books, family pictures and any clothing that is necessary. Church-going individuals are allowed to retain their family pew and burial plots.

Debtors who are still a part of the military are allowed to keep any equipment that is required for the job. They may retain their arms, uniforms and military equipment.

Any bankruptcy claimant who is working may keep a minimum of 75 percent of their unpaid wages. If the debtor has a low-income, the judge for their case may allow them to keep a higher portion of their wages. Alabama state law also has a wild card provision for debtors. The law allows any debtor to keep $3,000 worth of personal property. This property can include any items the debtor wants except for life insurance.

Filing for Bankruptcy

In the state of Alabama, debtors must take a means test to determine which type of bankruptcy will work best for them. According to the law, any debtor who has an income below the state median may file for Chapter 7 bankruptcy. Debtors who make more than the median must pass another series of tests if they wish to file a Chapter 7 bankruptcy.

Debtors who can pay at least $10,000 over five years will most likely have their Chapter 7 bankruptcy turned down. For individuals who can pay at least $6,000 over five years, a lawyer or the judge will calculate how much the debtor can pay. If they can afford to pay off at least 35 percent of the unsecured debt, a Chapter 7 bankruptcy claim will be declined. Unsecured debt includes various credit bills or medical expenses.

To get started with the bankruptcy process, debtors should contact a lawyer. An experienced attorney can help guide debtors through the confusing process of claiming bankruptcy. Debtors should gather all documents pertaining to their property, a list of debts, records of major transactions, income statements and tax returns for at least two years. If the debtor owns a house or car, they should also bring their car titles, house deed and documentation of their loans.

Once all of the paperwork is in order, an attorney will determine what items are exempt under Alabama state law. After the paperwork is turned in, an automatic stay is placed on all of the debtor's loans and property. From that moment onward, creditors cannot contact the debtor or start foreclosing on any property. Many people who are in foreclosure will often start the bankruptcy process as a means to avoid foreclosure for a period of time.

The Trustee

As the bankruptcy case continues, all of the debtor's property and debts will be put in the hands of a trustee. This trustee will manage any money or property and divide it among the debtor's creditors. If the claimant files Chapter 13 bankruptcy, the trustee will manage their monthly payments for the next five years.

Filing for bankruptcy in Alabama offers debtors a few benefits. Debtors can keep a portion of their unpaid wages and retain a great deal of their property. Before filing for bankruptcy in the state, debtors should always contact a qualified attorney. Only an experienced lawyer can help the debtor to figure out the various filing procedures and navigate the legalities of a bankruptcy case.

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What If Bankruptcy Wasn't An Option and Didn't Exist?

I don't doubt that many people are able to save their financial skin by finding a bankruptcy lawyer and filing for personal bankruptcy. It seems to happen all the time in our society, and unfortunately it happens too much. If you've ever owned a business, and had someone not paying their bill, and then when you call them up, and they tell you they just filed for bankruptcy, it kind of lets the air out of your sails (and sales) for the day.

Now then, what if we did not have bankruptcy laws, and we didn't have bankruptcy lawyers? If that were the case do you think that more people would be more careful when it came to signing their name on the dotted line to borrow money? I think it certainly might, and it is unfortunate that most Americans cannot balance a checkbook once they graduate from high school, and that they might buy a home on a mortgage that they really can't repay, because they haven't honestly looked at their budget, or met the realization that they don't have enough money saved in case they lose their source of income or employment.

In other countries and in previous times there are or were debtors prisons, and places where people could work off the money they owed, until it was paid in full. This protected business owners, banks, and those who lent out money. Today, with our entitlement society, people don't think very much about the contracts they sign, or how they are going to pay back all the things they bought on a credit card, or on credit. That's very unfortunate.

Perhaps what is worse is that bankruptcy lawyers advertise on the radio telling people that they can get them off the hook for the money they owe. That seems rather unfortunate that they are putting the idea into the minds of consumers that they don't actually have to pay for the things they promised to pay for, of course they do, they have to pay for those things, but apparently if an attorney says they don't, and files a piece of paper with the court, they can ditch those obligations without regard to the other party.

Then the same consumers and citizens justify it in their minds that it's okay because they owe the money to a big bad corporation, or someone in the 1%, and that they deserved to get free stuff and have someone else pay for it. It's just this sort of attitude that is being perpetuated by bankruptcy lawyers, and even the Teleprompter in Chief. If we don't stop this lackadaisical attitude towards personal responsibility, we are headed for a big financial disaster. Indeed I hope you will please consider all this and think on it.

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What to Look for When Hiring a Bankruptcy Attorney

Being financially distraught and filing bankruptcy can be a very stressful and emotional time in one's life. This is why it is necessary to hire a bankruptcy attorney that will make the process still a lot smoother. The last thing you need is paying someone for the little bit of money you have left and having the goofball never returning your calls.

When it comes to finding the proper bankruptcy attorney, remember that filing bankruptcy is a group project. To be successful, everyone needs to be on the same page and work together well. This includes the staff that works at the law firm. Nothing is worse than losing confidence in your bankruptcy attorney because you feel that you are not getting your questions answered and no one is paying attention to your concerns.

Before choosing an attorney, one should get themselves a basic education on bankruptcy filing. The easiest way to do this is spend a little bit of time online searching different websites that have information that you feel is applicable to your case. Make sure the information is current and local to the area in which you reside and will be filing in.

Now it's time to interview a few bankruptcy attorneys. It is not totally necessary to interview more than one if you're comfortable with the first one you meet. If there is any kind of tension or there are bad dynamics going on in the office, it's best to look at a few others before making your decision. You have to remember that this person is in control of your financial destiny and you have to trust them fully. If there is a lack of trust or communication problems, you should probably look for a different bankruptcy attorney. One should feel totally comfortable sharing all their information with their bankruptcy attorney. When someone is intimidated or embarrassed they might decide to hide information from the attorney that might be pertinent to a successful bankruptcy discharge. Remember, you are hiring this person to help you not to impress them. Let the bankruptcy attorney decide what is important and what is not important. Throw all your cards on the table and let them shuffle them.

One thing that is irreplaceable with bankruptcy law is experience. Lately, with a large amount of people filing bankruptcy, many attorneys have added bankruptcy law to their practice. One should be careful because the new bankruptcy code has added complexity making experience a must. Make sure the attorney explains the entire procedure in layman's terms not legalese. Before signing any retainer agreement make sure that you understand the terms and there are no hidden costs. If you feel comfortable discussing personal matters with the bankruptcy attorney, you might have found the one.

When filing bankruptcy timing is everything and the proper attorney will know exactly when to pull the trigger and when to hold off. The only way someone will know if bankruptcy will help them is to get their feet wet by interviewing a few bankruptcy attorneys.

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What A Bankruptcy Attorney Will Tell You

A bankruptcy attorney specializes in helping individuals to properly conduct bankruptcy proceedings. In this process, the individual or couple will petition the court to discharge their debts so they do not have to repay them. This is often done as a method of reducing the amount of financial difficulty that the individual is dealing with, such as too much credit card debt or medical debt. A lawyer is not a requirement, but it is strongly encouraged under law. In addition, the process is complex. Discussing the case with a lawyer is always the first step for those considering this process to determine whether or not they should proceed with the plan.

Do You Qualify?

One of the first things a bankruptcy attorney will discuss with individuals is their ability to qualify to file. There are federal guidelines that must be met. Individuals must be at or under the state's median income in order to qualify. If they are not, they must pass the Means Test by proving they have extenuating circumstances and high, necessary expenses. Additionally, individuals must not have filed Chapter 7 in the last eight years.

Is This A Good Decision For You?

One thing to remember about these lawyers is that they do more than just help to fill in documentation. They also work on behalf of the individual filing. They offer advice and guidance. It is their responsibility to ensure that the process goes as smoothly as possible. As such, they also have the ability to work with individuals closely in determining if filing is a good option at all. For some, it may not be the best decision even if they qualify to file. This is where the lawyer can step in and potentially offer other debt management help.

How To Get Through The Process

From the filing of the paperwork to dealing with the questions of the bankruptcy trustee, the lawyer will help throughout the process with many important steps. This includes the Creditors Meeting, in which the individuals filing must come into the courtroom to answer questions and to potentially meet with creditors, if they decide to challenge the case. The lawyer hired is right there to provide guidance and to ensure that the best possible outcome occurs.

This big step will have lasting financial consequences for many people, but for many who file, it is the best possible way to overcome the financial burden they are dealing with on a daily basis. With the help of a bankruptcy attorney, it is possible to overcome these limitations and to move on to a successful financial future. To do that, set up a meeting with a lawyer to discuss your case and answer your questions.

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How Can I Hire a Bankruptcy Attorney If I Can't Pay My Bills?

When most people file for bankruptcy, they have already waited too long and are probably completely broke. In a perfect world, when times are getting tough, the smart thing to do would be seek the advice of a bankruptcy attorney before their world is completely upside down. As Americans we tend to view the world through rose-colored glasses because of the way we were raised. Many Americans started losing their jobs during the economic downturn that began in 2008. The economy is still in the tank and so is the job market. Many people believed real estate and the economy would bounce back quickly and they could take their time looking for a job. Instead, many of these people waited too long and their unemployment insurance ran out leaving them with zero dollars income. This is when people typically start selling personal property and any valuables they might have to keep the ship afloat. The sad thing is, filing Chapter 7 bankruptcy could quickly eliminate all the stress caused by the bills that are piling up. People don't need to worry about losing all their property by filing bankruptcy. The bankruptcy code allows for generous exemptions to protect a person's property. It would be pretty hard to give someone a fresh start if you took away everything they owned and sold it to pay off creditors. That's why Congress included bankruptcy exemption laws to allow a person to protect the necessities.

One problem many people have when waiting too long to file for bankruptcy is coming up with the money to pay the bankruptcy filing fees and hire a bankruptcy attorney. In some extreme cases, the people that bury their head in the sand might end up losing everything prior to filing bankruptcy making them essentially too broke to file. For this group, basically they have nothing to lose so why waste the money filing? Even if the creditors began suing them and got judgments against them, there would be nothing to attach.

Good advice would be to consult a bankruptcy attorney when times start getting tough. This will give an individual an out if things don't turn around in their financial life. Having that knowledge of options that are available to them can be invaluable to their recovery. Sometimes it might be as simple as some kind of debt settlement negotiated with the creditors. For those that have a large amount of unsecured debt, it's foolish not to consider filing Chapter 7 bankruptcy. At the end of 2011, it was reported that the average American has close to $16,000 in credit card debt. Considering this same person only makes about $35,000 a year, there is a good chance that they will never be able to pay this debt off in a lifetime outside of winning the lottery. Most Americans are kicking the can down the road and just getting by another month. At some point in time when disaster strikes, the wheels will fall off and the options will be much more limited for that individual. What does it hurt to take the time and consult a bankruptcy attorney before it's too late? There might not be anything there, but if there is it might be a lifesaver.

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If I File Bankruptcy Will I Lose All My Stuff?

Many individuals avoid filing bankruptcy because they're afraid that they will lose everything they own to the bankruptcy court. This actually would fall under bankruptcy myths and legends found on blogs on the Internet. I don't know where anyone got this idea, but until lately it has been a popular opinion. I believe that this is one of the reasons that people use bankruptcy filing as a last resort to resolve debt issues. This rumor has gone around for years and many experts believe it was probably started by the credit industry. The creditors and debt collectors have told doozies over the years with the idea of scaring people into continuing to pay their debts. Some creditors have gone as far as telling the debtor that if they didn't pay their debts they would be arrested and thrown in jail. The last time I checked, there is still no debtor's prison in the USA. As long as people keep falling for these tactics, I suppose the lies will continue on.

When an individual decides to file bankruptcy and sits down with a bankruptcy attorney, the first question they will ask is, "Will I lose all my stuff?" Typically, the bankruptcy attorney will explain the bankruptcy exemption laws and how they work. The idea of getting a fresh start from filing bankruptcy can't happen if you take everything away from the individual. This is why Congress enacted generous bankruptcy exemption laws to allow an individual to protect a certain amount of property when filing Chapter 7 bankruptcy. On top of that, in today's economy, used personal belongings don't have much value as they did in the past. The last thing a bankruptcy trustee wants to do is load up the truck of used furniture and head on down to the swap meet to liquidate it. The bankruptcy trustees always weigh the time versus the reward for selling nonexempt property. And this is totally only in the case of property that is not protected by an exemption law.

The property that is on the radar of the bankruptcy trustee is valuables like antiques, a car, bank accounts and/ or real estate. Once again, it depends heavily on how easy it is to liquidate the property. If something will take a long amount of time and only recover a small amount of cash, they probably won't waste their time. This is another reason why hiring a bankruptcy attorney can be invaluable. The bankruptcy attorney that practices in that district will know the bankruptcy trustee and know what is allowable and what is expected of the debtor to get a successful bankruptcy discharge. This will make the entire bankruptcy run smoothly from the filing of the bankruptcy petition to the bankruptcy discharge.

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Chapter 7 Attorney: Moving Past Bankruptcy

While it can be difficult to make the decision to hire a Chapter 7 attorney and move forward with bankruptcy filings, it is sometimes the only decision to make. What can be even more difficult, of course, is moving back from the brink. There are no two ways about it: filing for bankruptcy is not a great thing for your financial records. The repercussions to your credit report are serious and unavoidable. It will take several years for you to rebuild that credit, but it can be done. Your first steps will involve finding a new outlook on financial responsibility. Here are some of the ways you can move past this unfortunate period and beyond bankruptcy.

Emergency Funds

If you find a Chapter 7 attorney who is willing to provide you with advice on the future as he is helping your through the process, he may recommend starting an emergency fund. One of the easiest ways for an individual to get in trouble with credit cards is when an emergency pops up. The car breaks down, for instance, or medical bills suddenly demand your attention. After bankruptcy, you may not have a credit card to rely on anymore, so you need to make sure you have the money to take care of these incidents as they occur. Vow to put away a certain amount of money each month for just such an eventuality.

Budget

Any Chapter 7 attorney you talk to will tell you that most people have little idea how much they spend in relation to how much they bring in. They probably think they know, but unless you sit down and make a budget, you are walking a tightrope without a net. This is especially true once you have no credit cards on which to rely. Make your budget. Figure out exactly how much income you're bringing in and then write out your expenses. You may realize quickly that you either aren't bringing in enough or you are spending too much. If this becomes apparent, you'll need to fix something on one side of the equation. It's usually easier to cut expenses than it is to increase your income.

Rebuild Your Credit

A lot of people make the mistake of thinking that since bankruptcy is erased from your credit report in seven years, they will be eligible for a loan in exactly that time. That's not always the case. You still have a large gap in your credit history that banks will not look on favorably. Try to close that gap. Apply for a secured credit card and begin rebuilding your credit history in the meantime.

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Why Businesses Need a Bankruptcy Attorney When Filing Chapter 11

Though some businesses that have difficulty meeting their financial obligations opt to file a bankruptcy to liquidate their assets and close the doors - called a Chapter 7 bankruptcy - other businesses decide to remain operating, and thus pursue a bankruptcy allowing them to reorganize their debts - called a Chapter 11 bankruptcy. Though a Chapter 7 is not as simple as putting a "For Sale" sign on the business' front door, a Chapter 11 is much more complex. Thus, it is very important for a business that pursues Chapter 11 to have an attorney skilled in its complexities. This article gives just some reasons for such.

One reason a business needs a highly skilled Chapter 11 attorney is because its executive should get a confirmation from the lawyer that Chapter 11 is a good route to pursue. The executive needs to discuss business' debts, assets, and income with the lawyer in some detail. They will also discuss the executive's ideas about reorganizing the business to remain afloat. After getting this information, a Chapter 11 bankruptcy attorney can confirm that reorganization is reasonable or he can explain the reasons that it is not a good option. Going to a general practitioner for this advice would be akin to a person seeking a divorce through a criminal lawyer.

Another reason that consulting a skilled Chapter 11 attorney is important is that the businesses' debts have to be classified and it has to propose a plan of reorganization to cure its financial problems. Typically, the reorganization plan cannot exceed five years. To be accepted by the bankruptcy court, the reorganization plan must be approved by the creditors. Often, to obtain approval quite a bit of negotiation is required and it is best done by an attorney who has been through the process before and knows the intricacies of the law.

Equally important, though filing a Chapter 11 results in an automatic stay which protects the business' assets from creditor action, it is common for creditors to request that the bankruptcy court "lift the stay" and permit them to do such things as foreclose on property and otherwise seize assets. To ensure that you have the best advocate to counter these attacks, it is necessary to obtain an attorney with extensive experience in Chapter 11 bankruptcies.

Sometimes the bankruptcy court will appoint a U.S. Trustee to oversee the business' reorganization and to check whether the business is in compliance with the reorganization plan; a skilled lawyer will be needed to work with the trustee to ensure that his oversight is not disruptive to the business' interests. These are just a few of the reasons that an experienced Chapter 11 attorney should be retained.

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In This Economy the Best Career Choice Is to Be a Bankruptcy Attorney

In today's economy, people are struggling to keep their jobs. It was recently reported that only 24.6% of all jobs in the United States today are actually good jobs. Working at Mickey D's or other fast food restaurants does not constitute a career choice by any means. The unemployment numbers were released in the beginning of August and with no surprise, are worse than the previous month at 8.3%. One thing the government is not telling us is the number of people that have fallen off the radar because their unemployment insurance has run out and they still are not working. Over 51% of Americans are now on government assistance. It seems that the number of Americans filing bankruptcy is soon going to take another rise. The number of Americans filing bankruptcy continued to rise to a high of close to 1.6 million back in 2010. Since then, the numbers have dropped a little or stayed flat. Many experts have been predicting that this might be the calm before the storm.

In this economy we should be instructing our children to go to law school to become a bankruptcy attorney. This is one of the only careers that thrives in a bad economy. Recently, many bankruptcy lawyers have diversified and started defending clients that were in foreclosure. When the foreclosure numbers started climbing back in 2010, attorneys noticed that the banks that were foreclosing warrant even doing diligence to prove to the court who actually was on title of the property. Because of the derivatives market, many loans that were taken out back in the boom time were sold and resold many times over. This happened due to the deregulation of the industry. Many banks could not even prove that they own the paper free and clear, angering the judges causing the bank to lose the property entirely. Now, a foreclosure takes approximately one year from beginning to end as banks are making sure that their I's are dotted in their T's are crossed. Real estate experts are predicting a continued decline in real estate prices nationwide and the economy continues to wallow.

With all this going on this makes it a prime time for young adults in law school to begin practicing as a bankruptcy attorney. This economy will not recover any time soon and over the next 10 years we will see many Americans filing bankruptcy. People having financial trouble should consider consulting a bankruptcy attorney to look at different options. For someone with a large amount of unsecured debt, filing Chapter 7 bankruptcy is King. If it's more about protecting one's property Chapter 13 bankruptcy is probably better. Americans that are buried under a mountain of debt shouldn't wait around until they hit rock bottom, but save any assets they have now by using a bankruptcy filing. Bankruptcy will break the bondage of debt and send the consumer on the road to becoming debt free.

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An Overview of Bankruptcy Lawyers

Bankruptcy laws are very complicated and it is nearly impossible for any average person to understand them that is why it is essential to hire a bankruptcy lawyer. The bankruptcy laws become more complicated after some amendments that have been made by the court recently. A good lawyer can help you a lot in choosing an accurate chapter of bankruptcy for you.

The bankruptcy lawyers specialize in the rules and laws which are related to the bankruptcy. However, it is also important to know that not every lawyer is experienced in the particular laws of the state. That is why it is highly advised to hire a local lawyer who has some good information about different laws of bankruptcy of your state. The laws of one state can be different from the other. So, before choosing a lawyer make sure that he/she has enough experience of working in your state.

Actually filing bankruptcy is a life changing experience for everyone and lots of emotions are attached to it. Therefore, you want to hire a person who understands your feelings and who also understands that from which phase you are going through. A good and experienced lawyer will exactly know how to handle any kind of fears or concerns of his/her clients.

Your budget is a key element, when filing your bankruptcy. It is very essential to have a perfect understanding of your budget. Generally these lawyers charge pretty high fee for their services. A client is responsible to pay for the actual bankruptcy and these costs depend on the different kind of bankruptcies.

For example the chapter 7 bankruptcy runs around the $350. Then, a lawyer will charge more or less $1000 to $2500. If the fee of the lawyer is too high for you then try to find any other lawyer. But also keep it in your mind that these legal services have some charges and it will be good for you to pay a bit more for a trustworthy and an excellent lawyer.

Choosing a reputable lawyer is very crucial for the results and outcome of your case. No one wants to choose a lawyer randomly and we all know that blindly choosing a lawyer could have some really negative impacts on the final outcome of the case. When picking a lawyer, ask your friends, family and colleagues for the recommendations.

Do not pick any bankruptcy lawyer randomly or at the last minute. Perform some advance research and planning before making any final decision. It is extremely important that you work with a lawyer who dedicated his/her self in this particular field of bankruptcy. If you hire a good lawyer then he or she will make the overall process simpler and easier.

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Filing for Bankruptcy - Look Before You Leap

In the event of unpaid debts, it is advised to call or e-mail law firms, before attempting any desperate measures such as raiding one's retirement plan, transferring property, or transferring credit card balances. One must consult bankruptcy lawyers, before making such hasty decisions.

Make sure that experienced bankruptcy lawyers are contacted if one has been sued or if there remains a pending judgment. Once a judgment has been issued, the underlying debt becomes a secured debt and can be paid off by seizing bank accounts, garnishing wages or seizing property.

Note that bankruptcy is not a good solution if one is elderly and/or has no assets that a creditor could garnish (social security wages, as an example) or seize. Even if one has non-exempt assets and debts such as student loans, an Atlanta bankruptcy attorney always advises not to file for bankruptcy.

It should be known that bankruptcy for individuals if of two types- Chapter 13 and Chapter 7. A Chapter 13 bankruptcy is also referred to as a "wage earner's plan." In this scenario, debts can be paid off over a period of 3 to 5 years by individuals without paying any interest on payment towards debt. One cannot be sued while using the Chapter 13 plan and even does not need to sell its properties or assets to make payments. However, Chapter 7 is a liquidation bankruptcy, which helps the individuals to pay their unsecured debt in an efficient manner. Homes are seized only when it is currently not on mortgage payment, and even then one can work with Atlanta bankruptcy attorney to modify these payments outside of the bankruptcy case.

Filing for bankruptcy is not the only mode of making debt payments. It is important to decide which mode to select, based on one's ability to pay. One of them is loan modification. The bankruptcy lawyers can help negotiate with the lenders, to lower car and home payments, and also prevent foreclosure. Another mode that can be considered is debt settlement. When there is simply not enough balance on one's credit cards or medical bills to cover the cost of bankruptcy, debt settlement is an alternative. However, it is important to be careful of companies that claim to take certain items off one's credit report, as they are scams. Sometimes, debt settlement ends up being ineffective, as one ends up paying a part of the lowered payment to the debt settlement company every month, for "negotiating."

Get consultation from our team of experienced attorneys, lawyers, CPA's and IRS enrolled agents for Bankruptcy lawyers and Atlanta bankruptcy attorney.

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Filing for Bankruptcy Before, During or After a Divorce

At certain times in life, one bad thing leads to another. This seems to be the case when it comes to bankruptcy and divorce, with the two sometimes being inextricably linked. Whether it is financial problems that lead to marital discord, or it is the divorce itself that brings about unsustainable financial obligations, knowing what to do in this difficult situation is essential in keeping your current quality of life.

The sad reality is that both have the very real possibility of influencing each other and can present major problems if not approached in the proper manner. Understanding your options before, during and after a divorce can keep you from being dragged into a financial-legal crisis.

Prior to Divorce

In an ideal scenario, the bankruptcy filing will be handled prior to the divorce proceeding. This will enable the two parties to mutually decide how to divide their assets in the most equitable manner possible, while also deciding the debt burden that each is obligated to assume.

As long as the parties are still married, they are able to file a joint bankruptcy petition, even if they are separated at the time. This process will usually only work when the parties are able to cooperate with each other and with their attorney. The most beneficial aspect of filing before is that the divorce can proceed with the issue of marital debt having been fixed. This should allow for a more amicable and fair settlement.

During Divorce

Dealing with the bankruptcy process in the midst of a divorce has the potential to make a complicated process even more difficult, but may in fact be necessary, depending on the situation.

Whether one or both spouses in a divorce should file for bankruptcy depends mostly on the amount of debt in each party's name, along with whose name the marriage assets are titled. These assets include houses, cars and financial accounts. Discharging the debt of one spouse, while saddling the other spouse with high levels of money owed, does not fix the overarching issue of who must pay for the remaining marital debts.

Once the spouse files for bankruptcy, the bankruptcy court will issue an automatic stay. This disables creditors from continuing to try to collect any outstanding debts that have yet to be paid. The automatic stay also prevents the divorce court from moving forward.

Similarly, the divorce court will be unable to divide property between the spouses until the bankruptcy court has made a determination of which assets are exempt from the bankruptcy. It must be noted that exempt property cannot be sold by the trustee to pay off debts.

Post Divorce

Some formerly married individuals may choose to file for bankruptcy after the divorce with the intention of getting rid of some or all of the debts they were required to pay as part of the divorce order. Specific types of debts, however, are not dischargeable in either a Chapter 7 or Chapter 13 filing. This generally has to do with support obligations, which include child support and alimony. These types of obligation MUST be paid.

Property settlements may be dischargeable in certain scenarios. Non-support obligations, like the money owed in a property settlement, are not dischargeable in a Chapter 7 bankruptcy, but may be in a Chapter 13 filing. This is unless the court finds that the money owed is in fact a support obligation.

For those worried that their spouse will file for bankruptcy after the divorce is finalized, there are some protective options that they have in regard to this. These include indemnity agreements, property lien's, support obligations and title changes on joint debts.

With an understanding of what can be done before, during and after a divorce when it comes to filing bankruptcy, you will be certain to approach this complicated situation in the most efficient manner possible.

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