If you live in Alabama and want to file for Chapter 7 or Chapter 13 bankruptcy, you must participate in credit counseling before you file, complete the bankruptcy petition and other required forms, and file those forms with the correct Alabama bankruptcy court.
Because most of bankruptcy is governed by federal bankruptcy laws, the general bankruptcy filing process in Alabama is similar to other states. However, you will need to include some Alabama-specific information on your bankruptcy forms. In addition, the bankruptcy exemptions you may choose from depend on Alabama law.
(For more articles on the filing process, see Filing for Bankruptcy.)
Here’s what you need to know if you are filing for bankruptcy in Alabama.
In order to qualify for Chapter 7 or Chapter 13 bankruptcy, you must show that you received credit counseling from an agency approved by the Bankruptcy Administrator within the six month period before you file for bankruptcy. You’ll also have to take a debtor education course before you get a bankruptcy discharge. (To learn more about this requirement, including the rare exceptions, see Credit Counseling & Debtor Education Requirements in Bankruptcy.)
Each state has a set of bankruptcy exemptions – these determine what property you get to keep in Chapter 7 bankruptcy, and play a role in how much you repay unsecured creditors in Chapter 13 bankruptcy. (To learn more, see our Bankruptcy Exemptions area.)
Some states allow you to use the federal bankruptcy exemptions, but in Alabama you can only use the Alabama exemptions.
To learn about Alabama’s exemptions for your home and car, see The Homestead Exemption in Alabama and The Motor Vehicle Exemption in Alabama. For other Alabama exemptions, see Alabama's Bankruptcy Exemptions.
When you file for Chapter 7 or Chapter 13 bankruptcy, you must complete a bankruptcy petition, a number of schedules containing detailed information about your finances, and several other forms, including a lengthy form known as the “means test” (for Chapter 7) and a similar form for Chapter 13.
For more information about each of the official forms, including how to find them and fill them out, see Completing the Bankruptcy Forms.
When you file for bankruptcy in Alabama, you must compare your income to the median income for a household of your size in Alabama. If your income is less than the median, you will be eligible to file for Chapter 7 and, if you choose to file for Chapter 13, you can use a three-year repayment plan (rather than five years). This is called the means test.
If your income is above Alabama's median income, you still might qualify for Chapter 7, but you’ll have to provide detailed information about your expenses and payments on secured debts in order to find out. Most Chapter 13 filers also have to provide this information.
For information about each of these forms, including how to complete them, see:
Here’s how to find the Alabama-specific figures for these means test forms:
Alabama median income figures. Currently, the median income in Alabama is $38,321 for a single-person household, $46,025 for a household of two people, and more for larger families. These figures change periodically. You can find the most current figures for each household size here.
Example. Sara's annual income is $30,000. She lives alone. She will automatically pass the means test because her income is below $38,321.
Alabama standard deduction figures. Forms 22A and 22C list categories of living expenses such as housing, transportation, food, and childcare. For some of those categories (like childcare), you provide the actual amount you spend. For others, you plug in a predetermined amount -- sometimes that figure is a national standard, other times the number varies by county or region.
You can find all of the Alabama county and region-specific figures you’ll need for Forms 22A and 22C on the U.S. Trustee’s website at www.justice.gov/ust. Click on “Bankruptcy Reform” and then “Means Testing Information.”
Example. Housing and utility expense standards vary by county. If you live in Autauga County, your mortgage or rent deduction is $706 for a one-person household. But if you live in Baldwin County, the deduction is $826. You can find housing expense standards for each Alabama county here.
Some judicial districts and bankruptcy courts require bankruptcy filers to complete additional “local forms.” To find out if your court requires additional forms, contact the bankruptcy filing clerk. Some courts post these forms online on the court’s website. (Below you’ll find links to Alabama’s bankruptcy courts.)
There are three federal judicial districts in Alabama (see below for links). You can file in either:
You can use the Court Locator tool on the U.S. Trustee’s website to find bankruptcy court locations and websites. The three district bankruptcy courts in Alabama are: