But before you make the decision to file, it’s important that you learn all about Alaska Bankruptcy Law and review your options so you don’t find yourself in a worse financial position than before you started.
Below are some important facts regarding bankruptcy laws in Alaska to help you determine which option is best for your particular financial needs.
Alaska Bankruptcy Facts
Debt is a problem that many Americans struggle with, especially in Alaska. When bills pile up, it can be difficult to manage increasing costs and interest charges, leading debtors to feel suffocated and trapped. But while debt can accrue for several reasons, bankruptcy protection can be a solution for both consumers and businesses who are struggling financially.
Bankruptcy is a federal process that can either lower or completely wipe out a debtor’s financial obligations. There are a number of bankruptcy petitions that can be filed in Alaska, but debtors most commonly seek either Chapter 7 or Chapter 13. Each of these chapters provides for vastly different financial results, so it’s important you understand each process and what you can expect.
Chapter 7 Bankruptcy Protection
Chapter 7 is the most popular chapter in Alaska not only because both consumers and businesses can file, but because it results in the total discharge of unsecured debts (debts not backed by assets). Known as “liquidation bankruptcy,” the process involves creditors seizing a debtor’s assets in order to cover their financial obligations. Debtors usually emerge from Chapter 7 bankruptcy protection in Alaska within a few short months, which also contributes to this chapter’s appeal.
How to Qualify: If it’s Chapter 7 bankruptcy protection in Alaska you seek, then you must pass what is known as a “means test” to qualify, which will review your average income for the six-month period immediately preceding your petition. If your income is below the median for the state, then you will be eligible to file for liquidation bankruptcy. However, even if your income exceeds the average in Alaska, you may still qualify for Chapter 7. Hiring an experienced bankruptcy lawyer will help ensure all income factors are reviewed accurately so that no detail is overlooked.
Exemptions to Liquidation: When you file for Chapter 7 bankruptcy in Alaska, there are a number of assets you can exempt from liquidation, including your residence, disability and social security benefits, certain personal property, and jewelry if valued at under $1,000. A full list of exemptions can be obtained through your bankruptcy attorney.
Chapter 13 Bankruptcy Protection
For debtors who do not qualify for Chapter 7 or who prefer to abstain from liquidating assets, Chapter 13 “reorganization bankruptcy” may be a more appropriate option. Chapter 13 bankruptcy differs from Chapter 7 in many ways, the most significant being the fact that assets are not liquidated. Instead, debtors repay all or a portion of what they owe to creditors under a payment plan that can last anywhere between 3 to 5 years.
Also unlike Chapter 7, Chapter 13 can only be filed by individuals. To qualify, consumers must have amassed less than $360,475 in unsecured debts and under $1,081,400 in secured debts.
This is the ideal petition for debtors in Alaska who are facing home foreclosure, are behind on car payments, owe money in back taxes to the IRS, and who are not willing to part ways with non-exempt property.
Working with an Alaska Bankruptcy Lawyer
Because there are so many petitions to choose from and filing the wrong chapter can lead you to incur even more debt than you started with, it is imperative you retain legal counsel to protect your rights. Alaska bankruptcy attorneys take care of all the details of your petition, from examining your income and liabilities to helping you determine your exemptions so you do not have to rescind your valuables to creditors. Whether you are struggling with unpaid credit card bills, medical costs or business expenses, bankruptcy can provide you with the debt relief you’ve been searching for and your attorney will help you chose the best option that is best for your unique financial situation.
Schedule a consultation with a leading bankruptcy lawyer in Alaska to eliminate you financial burdens today.