A Video Overview Of Bankruptcy Relief Laws In Alabama

May 20, 2020
Tom McCutcheon
Bankruptcy
Serving North Alabama

Bankruptcy Law

As we are in the middle of a financial crisis and a health crisis in this country, I want to give you an overview of what the bankruptcy laws provide because I think a lot of people in this country are going to seek relief there.

Bankruptcy In Alabama

What You Need To Know About Bankruptcy Types

Types of Bankruptcy Video Transcription

As we are in the middle of a financial crisis and a health crisis in this country, I want to give you an overview of what the bankruptcy laws provide because I think a lot of people in this country are going to seek relief there.

So a basic overview of bankruptcy is an individual discharge, Chapter 7. That’s where you sort of give up what you have with certain exceptions in exchange for not having any debts and you walk away scot-free.

You can keep certain things. Some equity in the house, we’ll go into those details in a minute, but in individual bankruptcy, a full discharge, we don’t pay those debts for an individual.

It’s a Chapter 7. People that have certain assets that want to keep them that are wage earners and get a steady paycheck are eligible to file a Chapter 13. They’re a little more expensive. We’ll go into the details in a minute. But that’s called a wage earners plan and that allows people to pay those debts over 60 months. And so people who don’t have a regular wage and have a lot of equity in a home might elect to follow that plan.

Chapter 11 has two types. Chapter 11 is for corporations that want to reorganize and it’s complicated, it’s complex. We can do it and there’s two sizes of corporations that are delineated at about $2.5 million. It’s a small corporation, $2.5 million, big corporation.

There are other kinds. There’s Chapter 12 for farmers, but we don’t do those and quite frankly, I don’t know anyone who does.

So that’s an overview of the relief offered by bankruptcy. Remember, bankruptcy is always going to draw a distinction between a secured debt like a car where the bank holds the title and you owe the bank and a credit card is unsecured for all practical purposes. One’s unsecured, one’s secured. So those two types of debts are going to be created differently.

You’ll need to keep that in mind as we go forward and look at the chapters individually. Thank you.