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An Alabama debtor's Chapter 13 plan will last three or five years. Creative Crop/Digital Vision/Getty Images When an Alabama debtor cannot pay her debts as they come due, she may consider filing for bankruptcy. She can either file for Chapter 7 or Chapter 13 bankruptcy. If she has a significant number of assets that she would not like to lose to creditors, then she should file for Chapter 13 bankruptcy. In a Chapter 13 bankruptcy case, the debtor can keep all of her property and repay her debts over time.
Credit Counseling
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Before a debtor can file for Chapter 13 bankruptcy, he must attend a mandatory credit counseling session. During credit counseling, the debtor will consider his options and decide if Chapter 13 bankruptcy is the right choice for his financial situation. If he decides to pursue a Chapter 13 bankruptcy case, he can come up with a debt repayment plan during the counseling session. The debtor would be wise to hire an experienced bankruptcy attorney. A Chapter 13 case lasts for years, so if he encounters any problems throughout those years, his attorney can advocate for him.
Median Incomes
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A Chapter 13 debt repayment plan lasts for either three or five years. The debtor figures out the length of time she will spend repaying her debts by comparing her family income to the median family income for a family of the same size in the state of Alabama. As of 2010, the Census Bureau listed Alabama's median incomes as $38,278 for a single earner; $47,904 for a family of two; $55,433 for a family of three; and $65,079 for a family of four. Add $7,500 for each family member in excess of four.
Debt Repayment Plan
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If the debtor's median family income is below Alabama's state median, his debt repayment plan will span three years. If the debtor's median family income is above Alabama's state median, his debt repayment plan will span five years. One of the biggest advantages of filing for Chapter 13 bankruptcy is that a debtor can keep his house out of foreclosure. The debtor incorporates missed mortgage payments as well as other debts into the repayment plan. The debtor must propose this plan to the bankruptcy court, and the court decides whether to accept or reject the plan. Once the court has accepted a plan from the debtor, the debtor must make monthly plan payments to the trustee that has been appointed to his case. For the debtor to receive a discharge, he must make all plan payments on time each month during the three or five years.
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