Bankruptcy Qualifications In Alabama

Bankruptcy eligibility depends on the chapter being considered, the debtor’s income, expenses, debts, assets, prior bankruptcy cases, credit-counseling compliance and other circumstances. An attorney can evaluate whether Chapter 7 or Chapter 13 is available.

No. A person does not have to be unemployed or have no property to file bankruptcy. Eligibility depends on the applicable bankruptcy chapter and the debtor’s complete financial circumstances.

Chapter 7 qualification commonly involves reviewing household income, family size, permitted expenses, disposable income, assets, debts and prior bankruptcy history. Many consumer debtors must complete the bankruptcy means test.

The means test is a statutory calculation used in many consumer Chapter 7 cases. It compares the debtor’s current monthly income with applicable median-income data and, when required, deducts permitted expenses to evaluate disposable income.

Not necessarily. Income above the applicable median generally requires completion of the remaining means-test calculations. Permitted expenses and other adjustments may still affect the result.

The calculation generally considers income received by the debtor and may include income received by a non-filing spouse, subject to applicable exclusions and adjustments. The precise calculation depends on household and filing circumstances.

Certain Social Security benefits are generally excluded from the Bankruptcy Code’s current-monthly-income definition, but the income may still be relevant to other parts of the case or the debtor’s budget.

Yes. Employment does not automatically prevent a Chapter 7 filing. Eligibility depends on household income, permitted expenses, household size, debts and other financial circumstances.

Possibly. Owning property does not automatically prevent Chapter 7 eligibility. Equity, exemptions, loan balances, payment status and the trustee’s potential interest in the property must be reviewed.

A person who does not qualify for Chapter 7 may be able to file Chapter 13, delay filing if circumstances are changing or consider another debt-relief strategy. The appropriate option depends on the individual case.

Chapter 13 is generally available to an individual with regular income who can propose a feasible repayment plan and meets the applicable Bankruptcy Code requirements.

Regular income means income that is sufficiently stable and predictable to support a Chapter 13 plan. It may come from employment, self-employment, retirement, benefits or other reliable sources.

Yes. A self-employed individual may qualify for Chapter 13 if the person has sufficiently regular income, maintains adequate financial records and can propose a feasible repayment plan.

Chapter 13 is generally limited to individuals. A sole proprietor may sometimes address personal and business-related debts through Chapter 13, but a corporation or limited liability company ordinarily cannot be a Chapter 13 debtor.

Chapter 13 eligibility is subject to debt requirements established by federal bankruptcy law. Because the applicable rules and amounts may change, current eligibility should be calculated at the time of filing.

Not always. The required repayment depends on income, expenses, assets, debt classifications, arrears, secured claims, priority debts and other Bankruptcy Code requirements.

Chapter 13 may allow an eligible debtor to propose a plan for curing certain mortgage or vehicle-payment defaults while maintaining required ongoing payments.

A Chapter 13 debtor must satisfy applicable tax-filing requirements and generally must provide required tax information. Unfiled returns can delay or prevent confirmation of a repayment plan.

Most individual debtors must complete an approved credit-counseling course during the period required by bankruptcy law before filing, unless a statutory exception applies.

A prior case may affect eligibility, the automatic stay or when another discharge can be received. The result depends on the prior chapter, filing date, dismissal, discharge and the chapter of the proposed case.

Possibly. A previous dismissal may create filing restrictions or automatic-stay limitations, depending on why the case was dismissed and how recently it occurred.

Yes. Married individuals may file jointly or one spouse may file alone. A non-filing spouse’s income, jointly owned property and joint debts may still affect the analysis.

The Bankruptcy Code does not impose one general minimum-debt amount for every consumer filing. Whether bankruptcy is appropriate depends on the type of debt, income, assets, collection pressure, repayment ability and available alternatives.

Neither chapter is best for everyone. Chapter 7 may provide a faster discharge of qualifying debts, while Chapter 13 may help protect property, cure arrears or address debts through a structured repayment plan.

Ferguson & Ferguson can review income, expenses, assets, secured and unsecured debts, prior cases, tax returns and financial goals to determine whether Chapter 7, Chapter 13 or another option may be appropriate. Call the Huntsville office at 256-534-3435 or the Decatur office at 256-350-7200 to schedule a consultation.