If you're considering filing for bankruptcy in Alabama, the Alabama homestead exemption will help you protect the equity in your home. This article explains how much the Alabama homestead exemption will cover and how to apply it in your bankruptcy case.
In Alabama, you'll use Alabama's state exemptions and the federal nonbankruptcy exemptions. Although some states allow residents to use federal bankruptcy exemptions, this option isn't available in Alabama.
Alabama Homestead Exemption |
|
Homestead exemption amount |
$16,450 |
Can spouses who file a joint bankruptcy double the exemption? |
Yes |
Homestead exemption law |
Ala. Code §§ 6-10-2, 3, 4, 12 |
Other information |
Protects up to 160 acres; amounts are subject to change. |
Where to find other exemptions. |
Filing for Bankruptcy in Alabama |
In Alabama, the homestead exemption applies to up to 160 acres of real property on which your home, condominium, or mobile home is located. To claim the homestead exemption, you must occupy the property as your principal place of residence. Learn more about protecting property when filing for bankruptcy in Alabama.
You can file for bankruptcy in Alabama after living there for more than 180 days. However, you must live in Alabama at least 730 days before filing. Otherwise, you'd use the previous state's exemptions.
If you lived in multiple states during the two years before filing for bankruptcy, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period that immediately preceded your filing. (11 U.S.C. § 522(b)(3)(A).)
Learn more about filing for bankruptcy after moving to a new state, the current amount of the federal cap, and other essential exceptions to homestead exemptions.
In Alabama, you must file a homestead declaration before you file for bankruptcy to claim the homestead exemption. A homestead declaration is a form filed with the county recorder's office or office of the probate judge in your county to put your right to a homestead exemption on record.
You'll find Alabama's homestead exemption on the Alabama Legislature website in Alabama Code §§ 6-10-2, 3, 4, 12. Still, the best way to protect your assets is by consulting with a local bankruptcy lawyer.
If you can't protect all of your home equity, you might not be able to keep your home. Typically, the Chapter 7 trustee appointed to your case would sell the house, return the exemption amount to you, pay off the mortgage, and pay creditors with the amount remaining after deducting the trustee's fee.
In Chapter 13, you'd need to pay creditors the value of the nonexempt equity through the Chapter 13 plan. You can learn about other requirements you'll need to meet in Your Home in Chapter 7 or Your Home in Chapter 13.
When completing your bankruptcy forms, you'll do the following:
Because your home is likely your most valuable asset, consider consulting with a bankruptcy lawyer to ensure you can protect it in bankruptcy.
Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!
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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated September 15, 2023