What Are the Advantages of Filing a Chapter 7 Bankruptcy in Alabama?

Why is a Chapter 7 bankruptcy better?For most consumers, a chapter 7 bankruptcy is better than filing a chapter 13 bankruptcy. We want to share a few reasons why we feel this way by answering questions that are often asked.

What is the difference in a chapter 7 bankruptcy and a chapter 13 bankruptcy?

A chapter 7 bankruptcy is referred to sometimes as “straight bankruptcy” while a chapter 13 is often called “debtor’s court.”
The basic concept of each is fairly simple.

A chapter 7 bankruptcy does not have you make any payments into court. You simply pay the filing fee, a credit counseling fee, and then pay your lawyer’s fee. No payments are made after that to the creditors, unless you are going to keep the property (house, car, etc).

In a chapter 13 bankruptcy, you make payments into court over a 3 to 5 year period.

What is one advantage of a chapter 7 bankruptcy over a chapter 13?

One advantage is simply the speed that the bankruptcy is over.

In a chapter 7 in Birmingham, Alabama, you normally will be done with the bankruptcy and have your debts discharged about 90-120 days after filing.

A chapter 13 will take 3-5 years.

Why does speed matter?

All other things being equal, it is normally better to get into and then out of bankruptcy court as quickly as possible. The whole idea of bankruptcy is to get a “fresh start” so why delay that 3-5 years?

The sooner you get out of bankruptcy, the sooner you can get on with your life.

You also won’t have payments of 3-5 years hanging over you which often cause Alabama consumers to not be able to stay in a chapter 13 bankruptcy.

Why can’t most people who start a chapter 13 stay in it?

The problem is you must not only make your payments into court but you must also continue to pay your mortgage, car payments, etc.

It is quite common for something to come up and the payments can’t be made into court. So eventually, sooner or later, most people do not stay in the chapter 13 but instead are “dismissed” from the case.

What’s the problem with being dismissed?

There is not a discharge of the debts. You filed for bankruptcy and will pay the price for that on your credit reports, having to answer “Yes” when asked “Have you ever filed for bankruptcy” but you don’t get the benefit of having your debts discharged.

Is a chapter 13 bankruptcy ever better than a chapter 7?

Yes. There are certain situations where all you need is time. Time to reorganize certain debts. Time to get caught up. You may have been out of work and fallen behind but now you are back at work and can pay your normal bills and you can pay into court on the back debt or “arrearage” that you owe.

You may have too much equity in your house to do a chapter 7.

There are situations where it is better to file a chapter 13 than a chapter 7 but for many people, who qualify (not everyone can qualify for a chapter 7), it is faster and better to file a chapter 7.

Feel free to get in touch with us.

If you live in the Birmingham area of Alabama and want to talk with us about your situation and what chapter of bankruptcy is best for you (if bankruptcy is even the best option), feel free to contact us.

You can call us at 1-205-879-2447, or you can fill out a contact form and we will get back with you as soon as possible.

Have a great day.

-John Watts


  1. Brandi Wolfe says:

    I don’t think I filled out the form right but I am in debt, have debt collectors calling my cell phone and the cell phones of my family. I really don’t know what to do because I absolutely do not have the money to pay.

    • JohnGWatts says:

      Brandi, if you live in Alabama call my office at 205-879-2447 and we can talk about the collector calls.

      If the calls are going to your cell phones, this may violate the Telephone Consumer Protection Act (TCPA) which prohibits, under some circumstances, auto dialed or computer dialed calls to your cell phones as well as the annoying pre-recorded messages.

      About having money to pay — there are really two issues.

      Paying the debt which we should do if and when we can but you need to make sure you pay it to the right people and not to some scam collection agency that really has no right to collect the debt. Instead, pay the creditor or a legitimate collector that is not violating the law. Think of it this way — if a collection agency will violate the FDCPA, then can you trust it when it says “We are the legitimate owner or authorized collection agency — trust us and pay us”? I think when a collection agency shows it will lie and break the FDCPA, it is hard to believe you should pay them.

      The other issue is whether or not you owe the debt, is the collection agency violating the FDCPA or Alabama law? If so, then look at your options on suing.

      Bankruptcy can be a valid option but rarely if the reason is to just get collectors to stop harassing you and your family.

      So give us a call if you would like to chat — make sure you tell the receptionist you want to talk about collection agencies and bankruptcy and your options. No charge to chat — we’ll help you understand your options.


      John Watts
      Birmingham, Alabama

  2. Marie G says:

    I need help. My ex husband has filed for Chapter 7 bankruptcy and converted to Chapter 13. He owes back child support and has not yet complied with the divorce decree to distribute a portion of his 401K to me. He is also surrendering our former home since I quitclaimed it to him. I am unsure whether is it in my best interest to submit proofs of claim and/or to make objections to his Chapter 13 plan. Can you help?

    • John Watts says:


      I help people with filing bankruptcies but it sounds like you need a lawyer that helps creditors in bankruptcy. If you are owed money then you would be considered a “creditor” — I can tell you this. You need to coordinate between your divorce lawyer and your bankruptcy lawyer to make sure you get what you are entitled to receive from your ex husband.

      It can be frustrating navigating the legal world and bankruptcy complicates things even more sometimes.

      Let me know if you live in Alabama and I can give you the names of some of the creditor lawyers that I think do a good job for folks.

      Best wishes

      John Watts

  3. Emanuel Hawkins says:

    I am being sued by a company that I owe debt to and I have 14 days to respond to the summons..I also have a few outstanding debts that total to about $10,000.. I would like to file Chapter 7 for..but I literally take home less than $200 a month and that is working two jobs and I pay child support, don’t own my home or car yet.I have had a small fire and a lot of my furniture and records were burned, so can you guys look up my debts by using my credit report? How much is it to file for Chapter 7? Are there payment plans? I would really appreciate your help in this matter! Thanks!

    • John Watts says:


      My quick thought for you is that if you only have $10,000 in debt then a chapter 7 bankruptcy may be “too extreme” of a solution for you.

      I’ll be glad to help you think through your options on bankruptcy and the lawsuit that was filed against you.

      Call my office at 205-879-2447 and ask to speak to Carolyn — tell her you have been sued and want to talk about that and bankruptcy. Let her know when your deadline to answer is so she can get you scheduled for a call or office meeting ASAP.

      Best wishes

      John Watts

  4. Jeff Curtis says:

    Thanks for posting this helpful information on chapter 7 bankruptcy. It is hard to consider anything an advantage when it comes to bankruptcy. I didn’t realize that speed had anything to do with it really, but it seems like it is really important to be really timely with filing. Thanks for the help!

  5. Daniel M says:

    So, I have accumulated about $12,000 in credit card debt due to having health issues and missing 6 months of work a few times over the last 4 years. I’m able to make the minimum payment, but only barely. My wife has a large amount of student debt we will HAVE to start paying in January 2018 and we have a child on the way. At what point should I just tap out and file a chapter 7? My insurance through my work doubled this year and doesn’t cover near as much, so I for-sea even more debt and some medical debt added on when the baby is born. Then their will be daycare to think about. Just drowning here and looking for some help.

    We do have a mortgage and 2 car payments also.

    • John Watts says:


      What you are describing is what Chapter 7 is designed for — when we are drowning and don’t see a way out.

      We need to look and see if that is true — is there no other way out? If no other way, then file chapter 7.

      If another way, then evaluate that other option — the costs and benefits. Compare to chapter 7 then make best decision for your family.

      Call my office at 205-879-2447 and we can help you think through your options and recommend an Alabama bankruptcy attorney for you to talk with if chapter 7 seems to be the best option for you.

      Thanks for your comment and hopefully things will turn around for you quickly.

      John Watts

  6. Diane Windham says:

    I need help evicted from my home taken care of my special need sibling, my car repossessed dont know how I’m going to get back and forth to work. Right now we live with another unemployed relative. I need help badly can am I eligible for chapter 7?

    • John Watts says:


      There are several factors that go into whether you are eligible for chapter 7 but sounds like you likely would be. I would suggest calling a local bankruptcy attorney ASAP to see if you qualify, if it makes sense for you to file, and how much it will cost.

      Generally bankruptcy stops things but does not reverse them. So filing bankruptcy can stop (at least temporarily) a repossession or eviction but after they happen, filing bankruptcy does not undo them. Hope that makes sense.

      So you have to look and see what debts you have to make sure that filing bankruptcy is actually a benefit for you now.

      If you need help finding a bankruptcy lawyer in Alabama just let me know — you can email me directly at John [at] WattsHerring.com or just fill out our contact form here and we’ll get right with you.

  7. Tracy D Keeling says:

    I have recently lost my job, My mother just passed and she was helping me out with my bills. I have just this last month stopped paying my credit cards I have several and about 18,000 in debt. I do not own a home and still owe 16,000 on my car due to a previous vehicle being totaled. I have literally nothing in my name. I live with a family member who is willing to make my car payment for me,but that is all. Am i eligible to file Chapter 7 and still be able to keep my car?

    • John Watts says:


      You should be good to file chapter 7 — normally you’ll need to keep up the car payments so they will allow you to “re-affirm” the debt. Otherwise, if the car debt is not reaffirmed, you could lose the car.

      Talk to a chapter 7 bankruptcy lawyer — if you need a recommendation in Alabama call Matthew Dunaway at 205-705-3590 and tell him we sent you.

      Best wishes!

      John Watts

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