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Written by the Upsolve Team.
Updated September 30, 2020
Many well-known Americans have turned to bankruptcy to resolve debt problems. Walt Disney, Cyndi Lauper, and others. You are not alone in facing your debt issues and we are here to help. Filing bankruptcy in Montgomery does not have to stress you out. If your debts are credit cards, personal loans, or medical bills, you can file a Chapter 7 bankruptcy in Montgomery on your own to eliminate them. You can also file if you own a home or have other secured debts, such as automobiles. If your income is below the median income for Alabama, you likely qualify for Chapter 7. If you own a home and are behind on your mortgage, a Chapter 13 may be a better fit because it gives you the opportunity to keep your home and catch up on the payments. If you wish to walk away from the house, Chapter 13 may not be necessary as that can be accomplished as part of a Chapter 7 bankruptcy in Montgomery. Legal Services Alabama is a not-for-profit provider of legal aid located at 2567 Fairlane Dr. #200, Montgomery. Other legal aid providers may also be available. Alabama bankruptcy rules require you to provide your tax returns to the Trustee in PDF format to the email address listed for the Trustee. Your tax preparer can probably do this for you. If you know how to do it, or have a family member do it, that could be cheaper.
Montgomery Bankruptcy Lawyers - Estimated Cost
It’s often a wise decision to seek out a local lawyer if you feel you have a complicated bankruptcy case or if you have assets you are worried about losing. Montgomery attorney fees vary quite a bit. The cost of a bankruptcy lawyer in Montgomery varies quite a bit. It could be as low as $815 or as high as $1,500. Many attorneys offer a free consultation to get people to come into their office. There are very good attorneys who make it a practice to offer a free consultation. Be sure that you find out what the total cost for a Medford bankruptcy will be in your situation, and what Chapter, or type, of bankruptcy the lawyer recommends for you.
How to File Bankruptcy in Montgomery, Alabama for Free
Filing bankruptcy in Montgomery is a straightforward process. There are ten separate steps to follow to help put you on a path to a successful dischargewhen filing an Alabama bankruptcy.
Collect Your Montgomery Bankruptcy Documents
For a Montgomery bankruptcy you will need to gather the last two years of tax returns. Also, make sure you have the last six months of pay stubs and the last six months of bank statements. As to bank statements, even if the account is closed you may still need to provide them if you were a signer on the account. You may have to contact the bank directly to get these statements. Before you close an account print off statements for the last six months so you don’t have to request them later. If you don’t have a copy of your tax returns, ask the person or company that helped you prepare and file your returns (such as H & R Block) for copies. If you prepared your own returns you should be able to access a copy from your computer program. If all else fails, you can contact the IRS and request transcripts of your tax returns for the last two years. Ask your employer for the last six months of pay stubs, if you have not kept them. Some employers use an outside company to handle their payroll If so, you’ll have to contact them. If you are self-employed, you should prepare a profit and loss statement for the last six months; if you have a bookkeeper for your business, they can provide this to you. If not, then make sure to take the time to prepare these documents as you will likely need them even after filing bankruptcy in Montgomery. In the event you have to provide more documents to your Trusteeafter filing your case, make sure to provide them. Your cooperation will go a long way to help you in being successful.
Take Credit Counseling
The primary reason for taking the Credit Counseling course is that you cannot file a Medford bankruptcy case without doing so first. The course is helpful in helping you to examine how you arrived at a point of needing to file for bankruptcy relief. The course will only take about an hour and you can take it online or over the phone, as long as the course provider has been approved by the Bankruptcy Administrator for the Middle District of Alabama.
Complete the Bankruptcy Forms
When filling out the forms for your Chapter 7 bankruptcy in Montgomery, we recommend that you have with you a complete list of all of your debts, along with a budget that shows all of your income and expenses. Remember that you are filling out your petition, schedules, and statements under penalty of perjury, which means you must be absolutely truthful and provide all requested information. The more information you provide in your bankruptcy forms, the smoother your Alabama bankruptcy case will be. The bankruptcy system exists to provide honest but unfortunate folks the chance at a fresh start. In other words, honesty is absolutely necessary.
Get Your Filing Fee
For your Chapter 7 bankruptcy in Montgomery, the court filing fee is $335. The purpose of the filing fee is to cover the expense of the filing of the case. It also covers the costs the Clerk of the Bankruptcy Court will have in mailing out notices of your Alabama bankruptcy to all creditors. It also helps with the cost of conducting your creditors’ meeting, or 341 hearing. If you can’t afford to pay the fee at once but have to get your case filed as soon as possible, you can ask to pay the filing fee in installments. Usually, these installments must be paid over a period of three to four months, with the due dates set by the Court. If you pay the fee in installments, it’s essential that you make the payments on time. Otherwise, your Montgomery bankruptcy case could be thrown out, and your debts are not wiped out. Finally, it may be possible to have the filing fee waived. In order to have the Court look at the waiver requestyour household income can’t be more than 150% of the poverty level. Additionally, the Court will review any anticipated changes in income over the upcoming six month period when determining whether to grant a fee waiver for your Chapter 7 bankruptcy in Montgomery.
Print Your Bankruptcy Forms
We recommend that you print at least two copies of your petition, schedules, and statements so you have a full copy of everything you submitted to the Court when filing bankruptcy in Montgomery. A third copy may be needed for your Trustee, but since that is not typical it’s ok to hold off on printing three copies for now. If you can’t print the documents at home, you can visit the public libraryto make copies. If there is an office supply store closer, it may be more convenient to make copies there, though it’s possible that it’ll be more expensive. The Clerk will not accept forms printed on both sides, so make sure not to print any documents for your Alabama bankruptcy case double-sided, even if that would be cheaper.
Go to Court to File Your Forms
When you file your Montgomery bankruptcy, you will go to the Clerk’s office located in the U.S. Bankruptcy Court for the Middle District of Alabama. The address is One Church Street, Montgomery, Alabama 361104. This is also the mailing address. You do have the option of mailing your forms to the Clerk, but we recommend that you go in person. By doing so, you may save yourself a lot of time. If you don’t take the forms in yourself, you can’t quickly sign any documents if the Clerk finds something that has not been signed, and you’ll have to wait for a deficiency notice in the mail instead. When you enter the Montgomery Bankruptcy Court building, you will have to go through a metal detector as part of building security. Save yourself a trip back to your vehicle by making sure you don’t have any knives or other sharp instruments in your pockets. It is best to leave your phone or iPad in your vehicle as well due to the possibility of noise generated by incoming calls. Court is open for walk-in traffic from 8:00 AM until 4:00 PM. It’s never open on federal holidays or on weekends.
Mail Documents to Your Trustee
There is a panel of people who serve as Trustees. Once your Chapter 7 bankruptcy in Montgomery is filed with the Court, your Trustee is chosen at random and will be responsible for reviewing all of your documents. They will be administering (or handling) your case. They will also conduct your creditors’ meeting, or 341 hearing. When you file an Alabama bankruptcy, you can expect to receive a letter from your Trustee telling you what to provide. They will let you know if it is okay to mail the documents, or whether they prefer to receive them by email. The Trustee will advise you in the letter how much time you have to respond. Make sure you are timely. You need to treat the Trustee with respect, and handling things timely is part of showing respect. Otherwise, you may find it difficult dealing with the Trustee even though you both share the same goal of having your Montgomery bankruptcy case progress through the Court without issue.
Take Bankruptcy Course 2
We recommend that you use the same provider of the first course if you were satisfied with their service, as long as they are approved by the Bankruptcy Administrator for this second course as well. You can take the second course online or on the phone. There are no approved physical locations to take the course in person when filing bankruptcy in Montgomery. It’s usually longer than the first course, and the purpose is to prepare you to manage your finances better going forward. The budgeting advice you will receive as part of this second course is quite good, and if you follow it, you should be better able to deal with money issues going forward. Your Alabama bankruptcy will get rid of your unsecured debt. Your second class will help you avoid filing in the future.
Attend Your 341 Hearing
The original intent for the 341 hearing was to allow a Trustee to help resolve issues between creditors and the person filing bankruptcy. The Bankruptcy Judge assigned to your case will not be present at the 341 hearing. Over the years, changes have occurred that makes it unlikely that any creditors will show up for the hearing. Their presence is unnecessary in a simple Chapter 7 bankruptcy in Montgomery. Should a creditor show up, they will be allowed to ask you questions under oath. That is not a reason for concern. Just be honest. In a Montgomery bankruptcy, the typical 341 hearing will only last a few minutes. You can expect to be asked whether you read all of your documents before signing them. You will be asked if you understood everything was signed under penalty of perjury. In other words, whether you understood that you had to tell the truth in your bankruptcy forms, as failure to do so can have serious consequences, such as the loss of your discharge, or even criminal charges. Being truthful is your main concern during this meeting.
Dealing with Your Car
If you owe money on your car when filing bankruptcy in Montgomery, you have the option of keeping the car by signing a reaffirmation agreement. This agreement means you will keep paying as originally agreed. The agreement will be mailed to you by the lender, and you will need to sign it and return it quickly. Once you sign the agreement, and if the Court allows you to reaffirm the debt, you can’t get out of paying for it. If you don’t pay going forward, the creditor can repossess the vehicle, and sue you for any deficiency owed after they sell the vehicle. If you have a lot of equity(or cash value) in your car when you file a Chapter 7 bankruptcy in Montgomery, you may have to pay money to your Trustee in order to keep it. Your Trustee is obligated to make certain you pay money in order to keep assets that have value beyond what state law allows you to have. It’s also possible to do a redemption of the vehicle, which means refinancing it for what it is actually worth. The risk is that most redemptions have a very high interest rate. Many people want to keep cars they simply can’t afford. Don’t fall into that trap. It is much better to buy a very inexpensive car and save up money for a better car down the road. Give up the overpriced vehicle if it will be a strain on your finances even after filing bankruptcy in Montgomery.
Alabama Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for Montgomery
Alabama Means Test
In order to file a Chapter 7 bankruptcy in Montgomery, it is necessary to pass the Alabama bankruptcy Means Test. Your income needs to be below the median income for a family of your size, or your disposable income (what is left after paying your cost of living) needs to be too low to pay back any meaningful amount even if given time and the protections of the Bankruptcy Court. The Alabama income limits are specifically set up for those persons filing bankruptcy in Montgomery and elsewhere in the Heart of Dixie. The Alabama bankruptcy Means Test does not apply if the majority of your debts are business debts.
Median Income Levels for Alabama
Alabama Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
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Poverty Levels for Alabama
Alabama Fee Waiver Eligibility for Cases Filed On or After May 1, 2020
Eligible for fee waiver when under 150% the poverty level.
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Alabama Bankruptcy Forms
There are no local Alabama bankruptcy forms that are required when filing a Chapter 7 bankruptcy in Montgomery. The forms you will use are the same used across the nation. You will file a petition, schedules A through J, and certain supporting statements. Be particularly careful to list all of your expenses. Many people buy things like food with cash. Don’t underestimate your actual living expenses by forgetting to include cash expenses.
Alabama bankruptcy exemptions are designed to keep you from losing everything when you file an Alabama bankruptcy. You are entitled to retain personal property and not feel guilty about filing. The Trustee will not seek to take assets that are properly listed and exempted under Alabama law. Assets can include furnishings, clothing, jewelry or other property that does not exceed the protections available under the Alabama bankruptcy exemptions. You’ll want to be sure you know what you can declare as exempt when you file a Chapter 7 bankruptcy in Montgomery.