What are my options for bankruptcy in Alabama?

Asked 12 months ago - Huntsville, AL

I currently have the 1st mortgage with only $37,000 owed on it, line of equity with $35,000, 3rd mortgage with $100,000 owed on it and finally the 4th with $78,000 owed. The last apprasial of the house was $140,000. Further detail of the situation the 3rd and 4th mortgages were done in conjuction with a business and there are some assets left in that business. Lots of Credit card debt exist also. What is the best option in bankruptcy? I would love to keep my home. First and second mortgage are current. Third mortgage is working with us to liquidate assets and redo the 3rd loan after that. Fourth mortgage is only behind 1 payment.

Attorney answers (3)

  1. Randy William Ferguson

    Contributor Level 19

    1

    Lawyer agrees

    Answered . You should really sit down with an attorney to decide your best option. It sounds like a chapter 7 since you have credit card debt that you need to wipe out, but there are things that could change it to a chapter 13.

    The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The... more
  2. Peter Monfore Neil

    Contributor Level 7

    Answered . From the facts stated, it sounds like you also own a business that is either no longer operating or is slowly being liquidated. This may not be in your interest if you are interested in filing bankruptcy. Furthermore, you may need to bankrupt your business and the liquidations are not in the ordinary course of business and may prevent a discharge. If you file Chapter 7 you are liquidating yourself and attempting to get rid of (discharge in legalese) your debts. You will be required to surrender your assets that are above the limit of assets considered exempt under Alabama law. You may be able to keep secured assets, cars and houses, if you are current and "reaffirm" that debt. In Chapter 13 your are reorganizing your debt and trying to pay some or all of it through a single payment monthly to a Bankruptcy Trustee. The benefit of this is you can keep your property in most instances and you go from having to make numerous payments to numerous creditors, to making a single payment which is less than sum of all the payments you make today. The decision on which chapter to file is beyond the scope of this forum and is a complicated one particularly in your case where you have a separate business and 4 mortgages against your home. It would be in your interest to consult an experienced bankruptcy and debt negotiation attorney prior to liquidating any further property to pay your mortgage.

  3. Dwayne M Farnsworth

    Contributor Level 14

    1

    Lawyer agrees

    Answered . Depending on your income, I would seriously consider filing a Chapter 13 proceeding. This would allow you to strip off your 4th mortgage and not pay it anymore if you complete your Chapter 13 plan. This is a very technical process but we have had great success with lien strips on primary residences over the last 4 years or so. The only hitch is that you will definitely need to get the 3rd mortgage lender on board early on (maybe even before you file your Chapter 13).

    You will need to see an experienced Chapter 13 bankruptcy attorney ASAP. Good Luck!

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